Q4 2021 Himax Technologies Inc Earnings Call

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Hello, Ladies and gentlemen, welcome to the Helix Technologies, Inc.

Hello ladies and gentlemen, welcome to the Hemix Technologies Inc. fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To ask a question during this session, you will need to press the star then the one key on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to send the conference over to your host, Mr. Mark Schwellenberg from MC Group.

Quarter and full year 2021 earnings conference call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session to ask a question. During this session you will need to go at the start and the one key on your Touchtone telephone.

A reminder, this conference is being recorded.

I'd now like to turn the conference over to your host Mr. Mark Weinberg from MZ group.

Thank you and welcome everyone to IMAX is fourth quarter and full year 2021 earnings call joining us from the company are Mr. Jordan, <unk>, President and Chief Executive Officer, Ms, Jessica and Chief Financial Officer, Mr. Eric Lee Chief IR Officer.

Thank you. Welcome everyone to Hymax's fourth quarter and full year 2021 earnings call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, Ms. Jessica Pan, Chief Financial Officer, Mr. Eric Lee, Chief IRPR Officer.

After the company has prepared comments, we have allocated time for questions in a Q&A session.

After the Companys prepared comments, we have allocated time for questions in a Q&A session.

If you have not yet received a copy of today's results release, please email himx at mzgroup.us, access the press release on financial portals, or download a copy from HIMEX's website at www.imax.com.tw

We have not yet received a copy of todays results release. Please E mail <unk> Amex at MZ Group U S.

Access the press release on financial portals or download a copy from <unk> website at Www dot.

<unk> Dot com tw.

Unless otherwise specified, we will discuss our financials based on non-IFRS measures. You can find the related reconciliation to IFRS on our website.

Unless otherwise specified we will discuss our financials based on non <unk> measures you can find the related reconciliation the IRS on our website before.

Before we begin the formal remarks I'd like to remind everyone that some of the statements in this conference call.

Before we begin, the formal remarks, I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual results.

<unk> statements regarding expected future financial results and industry growth are forward looking statements involve a number of risks and uncertainties that could cause actual results.

or events to differ materially from those described in this conference call.

Or events to differ materially from those described in this conference call.

These factors include but are not limited to the effect of the COVID-19 pandemic.

These factors include but are not limited to the effect of the COVID-19 pandemic on the company's business, general business and economic condition in the state of the semiconductor industry. Market acceptance and competitiveness of the driver and non-driver products developed by the company. Demand for end-use applications products relies on a small group of principal customers.

On the company's business general business and economic conditions and the state of the semiconductor industry.

Market acceptance and competitiveness of the driver and non driver products developed by the company.

<unk> for end use applications products.

It's on a small group of principal customers.

Yes.

continued success in technological innovation, our ability to develop and protect our intellectual property, pricing pressures, including declines in average selling prices, changes in customer order patterns, changes in estimated full year effective tax rate, shortage in supply of key components.

Can you success and technological innovation.

Our ability to develop and protect our intellectual property.

<unk> pressures, including declines in average selling prices changes in customer order patterns changes in estimated full year effective tax rate.

Shortage in supply of key components.

changes in environmental laws and regulations, changes in export license regulated by Export Administration Regulations, EAR, exchange rate fluctuations.

Changes in environmental laws and regulation changes in export license regulated by export administration regulations.

<unk>.

Exchange rate fluctuation.

Regulatory approvals for further investments in our subsidiaries.

regulatory approvals for further investments in our subsidiaries, our ability to collect accounts receivable and manage inventory and other risks described from time to time in the company's SEC filings, including those risks identified in the section entitled Risk Factors.

Our ability to collect accounts receivable.

And manage inventory other risks described from time to time in the Companys SEC filings, including those risks identified in the section entitled risk factors.

In its Form 20F for the year ended December 31, 2020, filed with the SEC as may be amended.

In its form 20-F for the year ended December 31, 2020 filed with the SEC and may be amended.

except for the company's full year of 2020 financials, which were provided in the company's 20F and filed with the SEC on March 31st, 2021. The financial information included in this conference call is audited and consolidated and prepared in accordance with IFRS accounting.

For the company's full year of 2020 financials, which were provided in the company's 20-F filed with the SEC on March 31, 2021. The financial information included in this conference call is unaudited and consolidated and prepared in accordance with <unk> accounting.

Such financial information will generated internally.

Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor to which we subject our annual consolidated financial statements and may vary materially from the audited consolidated financial information for the same period.

And has not been subjected to the same review and scrutiny.

Including internal auditing procedures and external audits by an independent auditor to which we subject our annual consolidated financial statements and May vary materially from the audited consolidated financial information for the same period.

The company undertakes no obligation to publicly update or revise any forward looking statements.

The company undertakes no obligation to publicly update or revise any forward-looking statements.

whether as a result of new information, future events, or otherwise.

Whether as a result of new information future events or otherwise.

I will now turn the call over to Mr. Eric Lee Eric the floor is yours.

I will now turn the call over to Mr. Eric Lee. Eric, the floor is yours. Thank you, Mark.

Thank you Mark.

You everybody for joining us.

My name is Eric Li and I am the chief IRPR officer.

My name is Lee and I am the Chief <unk> Officer.

Joining me are Jordan Wu, our CEO , and the JCPen RCEFO.

Joining me are Jordan, our CEO and the JV, how pan our CFO .

On today's call, I would first review the HIMAC consolidated financial performance of the fourth quarter and four-year 2021, followed by the first quarter 2022 outlook.

On today's call I would first review the <unk> consolidated financial performance of the fourth quarter and full year 2021 .

Followed by the first quarter of 2022 outlook.

Jordan will then give an update on the status of our business after which we would tech question.

Jordan will then give an update on the status of our business, after which we will take questions.

Our fourth quarter revenue, whereas on the.

Our first quarter revenue was at the upper end of guidance range.

At the upper end of guidance range.

High course margin and the e PS both is cated. The guidance issue on novender fourth, 20 twentthousand one.

<unk> gross margin and the EPS.

You said that the guidance issue on November 4th 2021.

The fourth quarter revenues, gross margin, and EPS all reached new records.

Fourth quarter revenues gross margin and the EPS.

Reached new records.

Full year 2021 revenues the past $1.5 billion, along with record gross margin and EPS.

Full year 2021 revenues surpassed $1 5 billion.

Along with record gross margin and EPS.

For the fourth quarter, we recorded a net revenue.

For the fourth quarter, we recorded the net revenue of $451.9 million, an increase of 7.4% sequentially, and an increase of 63.9% compared to the same period of...

$451 $9 million, an increase of seven 4% sequentially and an increase of 63, 9% compared to the same period last year.

The first margin was 51.8%, an increase from the already high level of 51.7% in the third quarter.

Gross margin was 51, 8%.

The increase from the already high level of 51, 7% in the third quarter.

and above our guidance of around 50%.

And above our guidance of around 50%.

Non <unk> profit per diluted ads was $84 nine exceeding the estimates of 78.

Non-IFI's profit per diluted ABS was 84.9 cents.

exceeding the estimates of 78 cents to 83 cents.

283.

ISR's profit per diluted ABS was 81.5 cents, higher than guidance range of 74.5 cents to 79.5 cents.

<unk> profit per diluted ads was <unk> 81 five.

Higher than guidance range of $74 five.

279 five.

Revenue from large display driver was the $125 million in Q4.

Revenue from large display driver was $125 million in Q4, up 6.3 sequentially and near double year over year.

$6 three sequentially and the near double year over year.

Monitor revenue can be better than expected, up more than 30 percent sequentially, ahead of our prior guidance of a more than 20 percent increase due to accelerated orders for high-end monitor from certain enc stre of Commander Data.

Revenue came in better than expected.

More than 30% sequentially.

Head of our prior guidance of more than 20% increase due to assist the radius orders for high end monitor from certain customers.

Notebook sales continued strong gross gross momentum.

notebook sales continued strong growth momentum, delivering double-digit sequential growth as the result of strong shipment of high-end products toward leading notebook vendors.

Maintenance Division.

Delivering double digit sequential growth.

The result of strong shipment of high end product toward leading notebook vendors.

As expected, the fourth quarter TVIC revenue was done single digit sequentially on the backdrop of sluggish global TV market.

We expected.

The fourth quart fourth quarter television AD revenue was down single digit sequentially on the backdrop.

Thought sluggish global TV market.

In some cases.

In some cases, where TV customers who bought shipment liability to us and the software business headwinds under mutual...

<unk> TV customers.

<unk> shipment liability to us and to Salford business headwind.

Your mutual content.

We directed.

we redirected their allocated foundry capacity towards IT displays where demand stays strong.

<unk> foundry capacity cohorts displace current demand stays strong.

It was through such efficient operating execution that we were able to achieve sales growth for the large display driver business despite the slow TB market and further reinforce the business relationship with strategic cost.

He was too as such.

If it's efficient operating execution.

We were able to achieve sales growth for the large display driver business. Despite the slow TV market and.

Further reinforce the business the relationship with strategic customers.

Large panel driver IC accounted for 27, 7% of total revenues for the quarter.

Large panel driver IC accounted for 27.7% of total revenues for the quarter.

compared to 27.9% in the third quarter of 2021 and 23.3% a year ago.

Compared to 27, 9% is the third quarter of 2021, and 23, 3% a year.

Go.

Small and medium sized display driver, so resilient, sales with revenue of $276.6 million, up 9.6% sequentially and up more than 50% year over year.

Small and medium sized display driver so resilient sales with revenue of $276 6 million.

Nine, 6% sequentially and up more than 50% year over year.

The automotive segment has repeatedly been fantastic growing sector of Mt.

The automotive segment has repeatedly been the fastest growing sector among our small and medium-sized display drivers

Our small and medium sized display driver of segment with sales up more than 20% sequentially this quarter.

with the sales up more than 20% sequentially this quarter.

It's worth highlighting.

It's worth highlighting that the e-paper business, another product in our small and medium-sized driver line-up and one of the decent margins, enjoyed more than 80% sequential growth in Q4.

The EBIT per business another product in our small and medium sized driver lineup and one of the decent margin enjoyed more than 80% sequential growth in Q4.

Small and medium sized driver IC segment accounted for 61, 2% of total sales of our quarter.

Small and medium sized driver IC segments accounted for 61.2% of total sales of our quarter compared to 59.9% in the previous quarter and 64.5% a year ago.

Compared to a 15 nine 9% in the previous quarter and 64, 5% a year ago.

In Q4.

smartphone, tablet and automotive driver businesses contributed about

Smartphone tablet and automotive driver businesses contributed above that.

Sales with automotive significantly outgrowing the other two segments.

cells with automotive significantly outgrowing the other two spectacles.

a trend that we believe will continue over the next few years.

Trends that we believe will continue over the next few years.

Yeah.

The fourth quarter smartphone sales reached 91.

The fourth quarter smartphone sales reached $91.3 million.

$3 million.

Double digit sequentially and up more than 30% compared to the same period last year due mainly to higher shipments to a key customer.

up double-digit sequentially and up more than 30% compared to the same period last year. Still many too high shipments to key customers despite the outbreak of COVID-19 variants weighing down the worldwide market.

Despite the outbreak of COVID-19 veteran.

Paying down the worldwide smartphone market.

The smartphone segment represented around 20% of our total cells in Q4.

The smartphone segment represented around 20% of our total sales in Q4.

Our supply for smartphone.

Our supply for smartphone was still limited by the total capacity accessible to us, where we could only support shipments to select and copy

Still limited by the total capacity accessible to us.

Where we could only the poor shipment to select end customers.

Amidst a slow tablet market, our tablet revenue reached $85.8 million.

It's a slow tablet market or tablet revenue reached $85 8 million a.

a decline of single digit sequentially, but up around 30% year over year.

The decline of single digit sequentially.

Around 30% year over year.

The decline was caused by shrinking traditional DDI shipments. Acquired TDDI fills...

The decline was caused by shrinking traditional DD IC shipment acquire TBD.

Yes.

were slightly better than record level in Q3 and represented the eighth consecutive quarter of growth since initial production from the first quarter of 2020.

We're slightly faster than our record level in Q3.

And that represented the eighth consecutive quarter of growth since the initial production from the first quarter of 2020.

We maintained our leading market share position in the <unk>.

We maintained our leading market share position in the iOS tablet market with the rated TDDI penetration among leading name brands.

Our iOS App tablet market with SSL right is the <unk> penetration among leading name brands.

<unk> revenue in the quarter accounted for 19%.

Template revenue in the quarter accounted for 19% of total sales.

Wholesale.

Our first quarter revenue for automotive.

Set another record amounting to $89 $1 million up more than 20% sequentially and up more than 130% year over year.

set another record amounting to $89.1 million, up more than 20% sequentially, and up more than 130% year over year.

Thanks to our stone shipment in high-end DDIC products.

Thanks to our strong shipment being high end IC product.

rising TDD I-sheetment as well as market share gains across numerous automotive customers.

Rising TDD shipment.

With market share gains across numerous.

Automotive customers.

The panel inside vehicle continues to grow in quantity, size, and includes more advanced features.

<unk> continued to grow in quantity size.

In crude more advanced features.

we expect to see sustainable, robust growth in our automotive industry.

We expect to see sustainable robust growth in our automotive business.

Fourth quarter revenue.

Fourth quarter revenue from our non-driver business was $50.3 million.

Our non driver business was $15 3 million.

slightly down sequentially and up around 50% year over year.

Slightly down sequentially and up around 50% year over year.

We are pleased to report that our ultra low power.

We are pleased to report that our autolog power

AI image sensing total solution successfully entered into mass production in Q4 last year.

AI image.

Total solution.

<unk> entered into mass production in Q4 last year.

for a major tech name over a mainstream application.

A major tech NIM over a mainstream applications.

We reached this major milestone just one year after we delivered the first samples. A remarkable achievement and illustration of the robustness of our AI.

We reached this major milestone just one year. After we delivered the first samples a remarkable achievement and illustration of the robustness of our AI solution.

The most image sensor sales were up with tings. 5G com business decreased by low tings sequentially as a result of slow demand in TV and Chromebook. However on a user basis.

Cmos image sensor sales were up mid teens.

E comm business decreased by low teens sequentially.

Result of slow demand in TV and the chromebook.

However.

Year over year basis.

<unk> sales were up more than 70% are resection of our leading position across <unk> AK TV gaming monitor and the low power notebook.

T-Con sales were up more than 70%, a reflection of our leading position across 4K, 8K TV, a gaming monitor, and low power notebook.

Non driver products in Q4.

Now driver products in Q4 accounted for 11.1% of total revenue.

Accounted for 11, 1% of total revenues.

as compared to 12.2% in the third quarter of 2021 and 12.2% a year ago.

That's compared to 12, 2% in the third quarter of 2021, and a 12, 2% a year ago.

Now, IFIS growth margin for the fourth quarter subtended at high level of 51.8%

<unk> gross margin for the fourth quarter.

<unk> sustained it at high level of 51, 8%.

a continuation from 51.7% of last quarter and the greatly increased from 31.2% of the same period of law.

Continuation from 51, 7% of last quarter and the greatly increased from 31, 2% of the same period last year.

The higher gross margin.

The higher gross margin was the reflection of better mix towards high-end products area and a more favorable IC pricing environment resulting from tight boundary capacity.

What's a reflection of better mix towards high end products area.

More favorable pricing environment, resulting from tight foundry capacity.

High FIS gross margin was also 51.8% for the quarter.

<unk> gross margin was also 51, 8% for the quarter.

Our non-IFRS operating expenses for the fourth quarter was $48.5 million, up 9.1% from the previous quarter and up 11.5% from a year ago.

Our non <unk> operating expense expenses for the fourth quarter was $48 $5 million up nine 1% from the previous quarter and up 11, 5% a year ago.

The sequential increase was a result of a one time cash bonus.

The sequential increase was the result of a one-time cash bonus at the end of December to further reward employees.

At the end of December to further reward employees.

For the remarkable financial results why the year over year increase was caused mainly by increased the salary.

for the remarkable financial results while the year-over-year increase was caught mainly by increase the salary.

<unk> operating expenses were $50 nine a $56 million.

IFI's operating expenses were $56 million for the first quarter, down 18.2% from the preceding quarter, but up 27.9% from a year ago.

For the first quarter down 18, 2% from the preceding quarter, but up 27, 9% from a year ago.

The difference was mainly due to annual bonus compensation, which we award employees at the end of September each year.

The difference was mainly due to annual bonus compensation, which we award in place. At the end of September , each year, the

Reflecting the higher sales and better gross margin.

reflecting the higher sales and the better growth margin.

The first quarter, now IAFI's operating income was $185.5 million, or 41.1% of sales.

First quarter <unk>.

Operating income was $185 $5 million or 41, 1%.

Percent of sales.

Versus 41, 2% of sales.

versus 41.2% of sales.

In the last quarter.

Again, the Q4 operating income reached a historical high.

Again, the Q4 operating income reached <unk>.

Hi.

Now, IFIs after tax profit was $148.4 million, or $0.84.9 per diluted ADF.

Now <unk> after tax profit was $148 4 million or 84 nine cents per diluted ads.

a new record high and increase from $138.9 million or $0.79.5 per diluted ADF last quarter.

<unk>, new rig are high and the increase from $138 $9 million or 79, five cents per diluted ads last quarter.

Now, let's have a quick review.

Now let's have a quick review on the 2021 four-year financial performance...

On the 2021 four year financial performance.

Revenues totaled.

revenues totaled $1,547.1 million in 2021.

And the $547 $1 million in 2021.

representing 74.4% growth over that of 2020.

Representing 74, 4% growth over that of 2020.

The ongoing efforts of the pandemic coupled with the foundry capacity shortage

The ongoing efforts of the pandemic, coupled with the foundry capacity shortage Cree.

created a challenging operating environment.

Created a challenging operating environment.

yet also provided favorable conditions for IC vendors such as ourselves.

Yes also provide provide.

Provided favorable conditions for IC vendors such as ourselves.

With overall market demand.

with overall market demand for our passing supply.

I'll passing supply.

Among our three major product categories.

Small and medium-sized display drivers posted the highest growth of 86.8% in 2021 with sales totaling $963.5 million.

Small and medium sized display drivers posted the highest growth of 86, 8% in 2021 with sales totaling $963 $5 million.

We saw extraordinary business momentum, particularly in tablet and automotive sales in 2021, as leading non-iOS tablet brands all adopted our tablet TDDI solution.

We saw extra ordinary business momentum, particularly in tablet and automotive sales in 2021.

<unk> now iOS tablet brain.

<unk> is our tablet P DDI solution.

And automotive display continues to evolve at rapid rate in the number, size, and sophistication.

And automotive displays continued to evolve had rapid rate in the number size and sophistication.

Automotive sales enjoyed the highest growth among all product lines in 2021, up more than 110%. Quiet sales for tablet IC, our top sales contributor in 2021, grew 77%.

Automotive sales enjoyed the highest growth among all product lines in 2021.

<unk> more than 110% flash sales for typically IC, our top sales contributor in 2021.

Grew 77%.

Smartphone and e-paper sales were up more than 85% and 23% respectively in 2021.

Smartphone and <unk> sales were up more than 85% and 23% respectively in 2021.

Revenue for large panel display drivers totaled $397 9 million in 2021.

Revenue for large panel display drivers totaled $397.9 million in 2021.

representing annual growth of 65.3%.

Representing annual growth of 65, 3%.

During the pandemic, the search in IT demand boosted our notebook display IT sales significantly. Up more than 300,000 users per day.

During the pandemic.

Search.

Demand for stated boosted our notebook display IC sales significantly.

Up more than 370%.

square-earth monitor display sales increased more than 30%

Monitor display sales increased more than 30%.

TV sales were also up by more than 40% despite the dip in worldwide TV shipment during the second half of the year.

TV sales were also up by more than 40% disliked despite the dip in worldwide TV shipment during the second half of the year.

Non-driver product sales totaled $185.7 million, an increase of 42% from last year.

Non driver products sales totaled $185 $7 million, an increase of 42% from last year.

The increase was mainly from <unk> sales.

The increase was mainly from T-COM cells. More than double AMIS growing needs for high frame rate and high resolution displays.

More than double emmis growing need for high frame rate and the high resolution displays.

Cmos image sensor business.

severe, kept by capacity constraints throughout the year. Watch out, miss single digit from the strong demand in notebook and web camera for work from home and online education.

Severe capped by capacity constraints through all of the year.

It was up mid single digit from the strong demand in notebooks and.

What camera for Wolfberry home and online education.

This annual sales increase was offset by WLO, wafer-level optics, as the legacy product of a major customer gradually decreased.

This annual sales increase was offset by W. A L L O wafer level optics.

The legacy product of our major customers gradually decreased.

Now, IFI's gross margin in 2021 was 48.5%.

<unk> gross margin in 2021 was 48, 5%.

greatly increased from 24.9% in 2015.

Greatly increased from 24, 9% in 2020.

The increase was mainly a refraction of more favorable IC pricing and the product mix resulting from the tight-

The increase was mainly a refraction of more favorable pricing and product mix, resulting from the tight.

Foundry capacity.

as well as increasing contribution from high margin per line, especially in automotive, notebook drivers and t-tops.

As well as increasing contribution from high margin product lines, especially in automotive notebook drivers and T com.

Non <unk> operating expenses were $171 $5 million up.

Now, IFIS operating expenses were $171.5 million.

$15.2 million or 9.7% due to higher salary expenses.

<unk> <unk> $2 million or nine 7% due to higher salary expenses.

and cash bonus we awarded our employees at the end.

Cash bonus.

Awarded our employees at the end of December .

despite the anti-dollar appreciation against the US dollar during 2021.

Despite the NT dollar appreciation against the U S dollar during 2021.

The currency such it touch a patient to hi, Max.

the currency fluctuations to high max.

were of limited impact as our accounting was US dollar denominated, the same as the bulk of our buying and selling.

Limited impact as we are.

Accounting.

Our accounting while U S dollar denominated the same.

The bulk of our buying and selling activities.

thereby creating a new natural hate.

Thereby creating a new nature H.

The stronger dollar in 2021.

The stronger NT dollar in 2021 did contribute to around $4.6 million of operating expenses increase as we paid the salary of the Taiwan-based employees and much of the Taiwan local incurred expenses in NT dollars.

Contribute to a wrong.

For $6 million of operating expenses.

Increase.

We paid the salary of the Taiwan based employees and much of the Taiwan local incur the expenses in <unk>.

Yes, it does.

Yet the non-IFRS operating expenses ratio of 2021 was reduced to 11.1% from 17.6% in 2020.

Operating expenses ratio of 2021 was reduced to 11, 1% from 17, 6% in 2020.

indicating our consistent and prudent management of operating expenses.

Indicating our consistent and prudent management of operating expenses.

<unk> operating expenses were 200, and the three $6 million.

ISIS operating expenses were $203.6 million, up $40.7 million or 25% compared to last year.

Up $47 million or.

25% compared to last year.

The increase came mainly from vast hit the portion of the annual bonus compensation.

The increase came mainly from the vested portion of the annual bonus compensation. We awarded employees at the end of September .

Worded award employees at the end of September this year.

reflecting higher sales and the better growth margin.

Reflecting higher sales and better gross margin.

Now IFIS operating income was $578.3 million or 37.4% of sales.

<unk> operating income.

$578 3 million or <unk> 37, 4% of sales.

An increase of $513 $7 million.

an increase of $513.7 million from $64.6 million in 2020.

64, six meaning in.

In 2020.

For the same reason.

But partially offset by increase of annual bonus compensation.

but partially offset by increase of annual bonus compensation.

<unk> operating income was $545 million in.

IFIs operating income was $545 million.

In contrast to $57.9 million in 2020.

In contrast to $57 9 million in 2020.

Our non <unk> net profit for 2021.

How are now IFI net profit for 2021 was $463.6 million or 265.1 cents per diluted ADF.

$463 6 million.

200, 265, one cents per diluted ads.

Up $411 2 million from $52 $3 million or $30.

up 411.2 million dollars from 52.3 million dollars or 30

0.2 cents per diluted ADS in 2020.

Two cents per diluted ads in 2020.

<unk> net profit for the year was full Humphrey.

IFI net profit for the year was $436.9 million or $249.8 cents, up $389.8 million from $47.1 million or $27.2 cents per diluted ADF in 2020.

$6 $9 million or 249.

<unk> up $389 8 million from $47 $1 million or 27.2 cents per diluted ads in 2020.

The upswing in income was a result of phase or better sales higher gross margin along with well managed operating expenses.

The upswing in income was a result of better sales, higher growth margin, along with well-managed operating expenses.

Turning to the balance sheet.

We had $364.4 million of cash, cash equivalent, and other financial assets of December 31, 2021, compared to $201.4 million at the same time last year and the $250.8 million a quarter ago.

We had $364 $4 million of cash cash equivalents and other financial assets.

As of December 31, 2021.

Compared to 200, and the one $4 million at the same time last year and the $258 million.

A quarter ago.

The higher cash balance.

The higher cash balance was mainly from $182.2 million of operating cash inflow during the quarter of 2020.

<unk> hundred $82 2 million of operating cash inflow during the quarter.

and payment received from customers for the purpose of securing their long-term chief supply.

And the payment received from customers for the purpose of securing their long term chip supply.

partially offset by payment we made in order to secure our long-term boundary capacity.

Partially offset by payment we made in order to secure our long term foundry capacities.

Restricted cash was $154 $1 million at the end of Q4 compared to $156 $8 million, a quarter ago, and Hungary, and a $4 million a year ago.

Restricted cash was $154.1 million at the end of Q4, compared to $156.8 million a quarter ago and $104 million a year ago.

The restricted cash was mainly used to guarantee the short term secured borrowings for the same amount.

The restricted cash was mainly used to guarantee the short-term secure borrowings for the same amount.

We had $52 $5 million of long term unsecured loans first of end of Q4 of which $6 million what current impulsion.

We had $52.5 million of long-term unsecured loans at the end of Q4, of which $6 million was the current portion.

Our year end inventory.

Our year-end inventories were $198.6 million, up from $160.9 million last quarter, and up from $108.7 million a year ago. And with the tide of the year, we have a lot of new ideas to share with you. So I'm going to start with the first one. So the first one is the

$198 $6 million.

$169 million.

Last quarter, and offline, Hungary, and the $8 7 million a year ago.

Amid tight foundry foundry capacity.

where demand still out passes supply. We continue to pursue an aggressive inventory build-out challenge.

<unk> demand steel I'll pass this supply.

We continue to pursue aggressive interim inventory build out <unk>.

The mass majority of our inventory position now is compromised.

The mass majority of our inventory position now is compromised.

comprised of working process goods while finished goods are promptly shipped as soon as they are available.

Comprised of working.

Processed goods finished goods probably ship.

They are available.

Accounts receivable at the end of December 2021 was $410 $2 million.

Accounts receivable at the end of December 2021 was $410.2 million.

Slightly up from 400.

slightly up from $400.9 million last quarter and up from $243.6 million a year ago due to higher sales. It looks really bad so looks like something smallest in your house!

$9 million last quarter, and <unk> $243 $6 million, a year ago due to higher sales.

DSO was 97 days at the quarter end as compared to 100 days both a year ago and from last quarter.

DSO was 97 days as of quarter end.

<unk> to 100 days, both a year ago and from last quarter.

First quarter capital expenditure were $2 million.

First quarter capital expenditure were $2 million.

versus one 2.1 million lot closer and the 0.8 million dollar a year ago.

<unk> was $2 1 million last quarter, and <unk> $8 million a year ago.

Fourth quarter, Capex was mainly for R&D related equipment and the in house testing of our IC design business.

The fourth quarter CAPEX was mainly for R&D-related equipment and in-house testing result from a high charge mower operation.

Total capital expenditure for the year was 476 million.

Total capital expenditure for the year was worth $7.6 million.

Many for design tools, ID related equipment, as well as in-house capture of our IT designers.

Mainly for design tools R&D route.

Dated equipment in house chapter of our IC design business.

As compared to five 8 million in 2019.

as compared to $5.8 million in 2020.

As of December 31, 2021.

IMAX had 174.3, meaning ABS outstanding, unchanged from last quarter.

Hi, Matt had the $174 three meaning ABS all sandy.

Unchanged from last quarter.

On a fully diluted basis, the total number of ADS outstanding for the fourth quarter was 174.8...

On a fully diluted basis.

The total number of ads outstanding for the fourth quarter was $174 8 million.

Now turning to our first quarter 2022 guidance.

Now turning to our first quarter.

Our <unk> guidance.

Coming off also record revenue result from Q4 2021 .

Coming off of the record revenue result from Q4 2021, we expect first quarter revenue to decline 5% to 9% sequential.

We expect first quarter revenue to decline, 5% to 9% sequentially.

yet still better than off-season sales we typically experience during the Lunar New Year season with fewer working days.

It feels better than obviously than we typically experience during the lunar new year season with fewer working days.

The guidance of the range implies year over year increase of 33% to 39% in revenues.

The guided range implies a year-over-year increase of 33 percent to 39 percent in revenue.

No.

Now IFIS growth margin is expected to be around 46% to 48% depending on the final product mix.

Gross margin is expected to be around 46% to 48% depending on the final product mix.

Now <unk> profit.

A trade vote to shareholders is expected to be in the range of $0.67 to $0.73 per fully diluted ADS.

Attributable to shareholders is expected to be in the range of 67 to 73.

Per fully diluted ads.

down 21% to 14% sequentially, but up 74% to 90% year over year.

Down, 21% to 14% sequentially, but up 74% to 90% year over year.

IFRS profit attributable to shareholders is estimated to be in the range of 63.5 to 69.5 cents per fully.

Hi, its highest profit attributable to shareholders is estimated to be in the range of 63.5 to 695.

Per fully diluted ads.

I would now like to turn the call over to Jordan Jordan the floor is yours.

I would now like to turn the poll over to Jordan. Jordan, the floor is yours.

Okay.

Thank you Eric.

I'll speculate both spectacular results in 2021 or achieved thanks to a macro level tailwind all efforts to secure a solid capacity.

Our spectacular results in 2021 were achieved thanks to macro-level tailwinds, our efforts to secure solid capacity, and a steadfast focus on optimizing product mix and solidifying strategic customer relationships.

Steadfast focus on optimizing product mix solidified strategic customer relationships.

all these factors contributed to the record sales and profit margin.

All of these factors contributed to the record sales and profit margins.

Now as we look ahead into 2022, against the backdrop of the industry-wide foundry capacity shortage, which is expected to expand well into 2022.

As we look ahead into 2022.

Against the backdrop of the industry wide foundry capacity shortage.

<unk> is expected to extend well into 2022.

the visibility into certain areas of consumer electronics is rather limited.

The visibility into certain areas of consumer electronics is rather limited with global consumption potentially impacted by the ongoing COVID-19 pandemic.

with global consumption potentially impacted by the ongoing COVID-19 pandemic.

Port congestion always inflationary pressure and worries over geographical conflict.

poor congestion, worldwide inflationary pressure, and worries over geographical conflicts.

However, we are upbeat about our year head growth prospect backed by a few product areas, notably the automotive and ultra-low power AI emissions.

However, we are upbeat about <unk>.

<unk> prospect.

Beck biofuel product areas, notably.

Automotive and ultra low power AI image sensing businesses.

which we feel confident will stay strong regardless of the macroeconomic concerns.

We feel confident with states show, regardless of the macro economic concerns.

We anticipate these two product areas, both with good gross margins, will outgrow other product lines in 2022.

We anticipate these two product areas.

As with good gross margins.

<unk> other product lines in 2032.

Robust demand.

Robust demands for our traditional automotive driver IC is backed by strong front-wheel capacity support, while automotive TDDI is on track to experience exponential growth throughout 2022 and beyond.

For our traditional automotive driver IC expect by strong foundry capacity support.

Automotive TVT is on track to experience useful in Asia growth throughout 2022 and beyond.

We expect to reach 10 million units cumulative shipments in automotive TBD.

We expect to reach 10 million units cumulative shipments in automotive TDDI in as soon as the second quarter of this year.

As soon as the second quarter of this year.

In the first quarter of 2022.

In the first quarter of 2022, our automotive product sales.

Multi product sales.

including traditional driver IC, TDDI, T-CON and OLED driver, are expected to represent more than 25% of our total sales.

Including traditional driver IC, <unk> and OLED driver IC.

Terrific.

More than 75% of our total sales.

As a contribution of automotive revenue grows you will better position, our long term product mix in terms of both profit margin business.

As the contribution of automotive revenue grows, you will better position our long-term product.

in terms of both profit margin and business feasibility.

T.

Meanwhile, we are highly encouraged by the early success, we have seen with.

Meanwhile, we are highly encouraged by the early success we have seen with ultra-low-power AI image sensing business thus far after a leading customer adopted it for mainstream applications.

Ultra low power AI image sensor business.

Thus far up to a leading customer adopted for mainstream reputation.

We expect to see more design wins awarded across broad customer base and a high variety of applications leading to robust sales growth for this new high-margin product line.

We expect to see more design wins awarded.

<unk>.

Broad customer base and the high.

Hi variety of applications, leading to robust sales growth for this new high margin product lines.

Sure.

No let me quickly address.

Now let me quickly address the ongoing boundary capacity shortage.

The ongoing foundry capacity shortage.

We expect the supply-demand balance to continue throughout 2022, especially on the material nodes that we are primarily anchored to.

We expect the supply demand imbalance to continue throughout 2022.

Actually on the mature nodes.

Primarily anchored to.

<unk> has been practically in this regard continuing to pursue new partnerships and agreements to increase available capacity and Ashish.

HIMAX has been proactive in this regard, continuing to pursue new partnerships and agreements to increase our available capacity and achieve our 2022 business goals.

Our 2022 business goals.

In the meantime, we entered contractual agreements with the vast majority of panel makers, and in some instances, select leading-end customers who are prepared or make a deposit to secure their long-term chip supply, which in turn also improves our business feasibility.

Meantime, we entered.

Okay.

Contractual agreements with the vast majority of panel makers and in some instances slipped leading end customers, who are the prepay or make a deposit to secure their long term <unk> supply, which in turn also improves our business visibility.

While pricing has stabilized recently.

While pricing has stabilized recently on both the foundry and customer sides, we guided for a modest sequential decline in gross margin for the first quarter due to a couple of factors.

Both the foundry and customer size.

Full of mortgaged sequential decline in gross margin for the first quarter due to a couple of factors.

First, our cost of goods sold this quarter represents pricing from the previous quarter when foundries were still raising their prices.

First our cost of goods sold this quarter represents pricing from the previous quarter claim foundries, where steel raising their prices.

Second in the fourth quarter, we benefited from.

Second, in the fourth quarter, we benefited from expedited orders from customers who paid a premium and we have since seen a decrease in such orders during the first quarter.

Expedited orders from customers, who pay the premium and we have since seen a decrease in special orders.

In the first quarter.

All year over year basis, However, our first quarter margin was substantially higher.

On a year-over-year basis, however, our first quarter margin will still be substantially higher.

Looking ahead into 2022 backed by malls secure foundry capacity the last year.

Looking ahead into 2022, backed by more secure factory capacity than last year, and an advanced product portfolio, we are well positioned to continue to grow our top line and will continue to work towards maintaining a high gross margin, one of our major long-term business goals.

And the diverse product portfolio, we are well positioned to continue to continue to grow our top line.

And we will continue to work towards maintaining our high gross margin, while all of our major long term business goals.

wherein we anticipate further revenue and profit growth in 2022.

We anticipate further revenue and profit growth in 2022.

With that, now let us start with an update on the large panel dry rising.

We said no that I'll start with an update on the large panel driver IC business.

Historically, the first quarter has seasonably been the slowest of the year due to the Lunar New Year holidays.

Historically, the first quarter has seasonally seasonal Italy being the slowest of the year due to the lunar new year holidays.

In addition, we are seeing softness in certain market segments and intensified China local competition.

In addition, we are seeing softness in certain market segments than.

Intensified China local competition.

Nevertheless, HIMEX is armed with a diversified and comprehensive product offering covering TV, monitor and notebook, which provides us with the flexibility to take actions in tandem with our customers and suppliers to direct production towards the sectors with stronger demand.

Nevertheless, it.

It is.

With a diversified and comprehensive product offering covering TV monitor notebook.

Which provides us with the flexibility to take actions in tandem with our customers and suppliers to direct production towards the sectors with stronger demand.

For the first quarter, largely specialized revenue is projected to be flat to slightly down sequentially, but this will represent an increase of around 70% year over year.

For the first quarter losses, <unk> revenue is projected to be flat to slightly down sequentially, but this will represent an increase of around 70% year over year.

Despite the low season, TV sales I expect to be around flat sequentially for the first quarter anchored by high end and large sized TV shipments.

Despite the low season, TVIC sales are expected to be around flat sequentially in the first quarter, anchored by high-end and large-size TVIC shipments to key accounts.

Shipments to key accounts.

Conversely, we expect both monitor and notebook IC sales to drop from last quarter due mainly to panel customers' inventory adjustments.

Conversely, we expect both monitor and notebook IC sales to truck from last quarter due mainly to panel customers' inventory adjustments.

in response to the slowing sales momentum after consecutive strong quarterly increase.

Thanks to the slowing sales momentum.

Consecutive strong quarterly increases.

Foreseeing the continuation of the prevailing foundry shortage and the demand for as long as this place to remain strong.

foreseeing the continuation of the prevailing foundry shortage and the demand for advanced displays to remain strong.

We continue to move towards higher-end markets while providing advanced driver ICs and heat Idaho à l'Ou thumbs up

We continue to move towards higher end markets oil provided of us driver Ics and pecans.

for a one-stop shopping experience, focusing on higher-end displays and premium models for the respective leading-end customers in TV, monitor and notebook markets.

Oh, one stop shopping experience.

As seen on higher end displays and premium models quarter, respectively, and customers in TV monitor and notebook markets.

Sure.

We also support them for the future upgrades for customers next generation products.

We are also supporting further feature upgrades for customers' next generation products.

including high speed interface, low power consumption, higher refresh rates, ultra large sized, high aspect ratio and curved view design.

Including high speed interface.

Low power consumption higher refresh rates.

Sure the large sized high aspect ratio in curved design.

All this will help boost our profit margins and represent a high barrier of entry that differentiates us from China local competition.

All these will help boost our profit margins and represent a high barrier of entry that differentiates us that differentiates us from China level competition.

Yes.

We remain positive on our last display driver IC business for 2032.

We remain positive on our large display driver IC business for 2032.

Now, let's turn to the small and medium sized display driver IC business.

Now let's turn to the small and medium sized display drive ICB.

In the first quarter, revenue is expected to slightly decline by missing single digits sequentially by increase around 30% year over year.

First quarter revenue is expected to.

Slightly decline by mid.

Mid single digits sequentially by inquiries around 20% year over year.

Sales of automotive drivers again.

Sales for automotive drivers again are poised to post another quarter of strong growth, up over 30% sequentially, while typeless sales are expected to be down mid-single-digit and smartphone I.C.E. business to decline double-digit sequentially.

Poised to post another quarter of strong growth of <unk>.

Obviously, 80% sequentially, while the type of sales are expected to be down mid single digit as smartphone IC business to decline double digits sequentially.

Yes.

No. This review these three major product segments within the small and medium sized display driver IC business.

Now, let's review these three major product segments within the small and medium-sized displays RIC business. First, the top three products. The top three products are the top three products. The top three products are the top three products.

First automotive set.

Order backlog and secured multiyear foundry capacity provide good long term visibility.

All the backlog and secured multi-year foundry capacity provide good long-term visibility for Himex in the automotive driver IC business, where we have a leading global market share of 40%.

Visibility for high mix in the automotive driver IC pieces.

We have leading global market share of 40%.

Thanks, Bye show desire coverage with all major panel houses and numerous car makers alongside a lost capacity, we expect the automotive sector.

backed by strong design wing coverage with all major panel houses and numerous car makers alongside an enlarged capacity.

We expect the automotive sector to be our number one sales contributor starting 2022.

To be our number one sales contributor starting 2022.

We are now targeting two couple of automotive sales again in 2022.

We are now targeting to double our automotive sales again in 2022 on top of the already strong 2021 sales which went up more than 110% from the year before.

On top of the already strong 2021 sales.

And up more than 100, 110% from the year before.

For the first quarter automotive driver IC sales are expected to grow over 30% sequentially and increase of more than 170% year over year.

For the first quarter, our automotive driver ID sales are expected to grow over 30% sequentially, an increase of more than 170% year-over-year.

More specifically, we expect the Q1 automotive TDIC sales still much larger than those of TDDI and AMOLED to grow over 20% sequentially.

More specifically.

We expect the Q1 automotive <unk> sales still much larger than those of TDD molded.

To grow over 20% sequentially.

on its own, accounting for more than 20% of our total sales.

Only one accounting for more than 20% of our total sales.

Notwithstanding the decent growth, we are still suffering from a severe foundry capacity shortage for automotive DDI seat.

Now, withstanding the decent growth, we are still suffering from a severe foundry capacity shortage for automotive TDIs.

which is the area with the most severe shortage for us right now.

Is the area with the most severe shortage for us right now.

Yes.

The automotive TDDI, where we are much better prepared in terms of foundry capacity, is set to outgrow DDI-C.

The automotive TDI.

We are much better positioned much better prepared in terms of foundry capacity.

You said to outgrow the dicey going forward.

Currently we are leading the market with hundreds of these <unk> projects across the board.

Currently, we are leading the market with hundreds of design-winning TDDI projects across the board with world-leading panel makers, tier 1s, and automotive OEMs, with just a small portion of them already in mass production.

Who are leading panel makers toys and automotive Oems with just a small portion of them already must production.

We announced earlier that our churn to automotive DVD.

We announced earlier that our Gen2 Automotive DVDi, which we started ramping as recent as Q3 last year,

Which we started ramping as recent as Q3 last year.

achieved 1 million units during the first quarter of shipment alone.

Achieved 1 million units.

During the first quarter of shipments alone.

The Gen 2 Automotive TD-DI has become the mainstream product shortly after introduction to the market.

The June two automotive TDI plus become dimension product shortly after the introduction to the market.

and already dominates our shipments right now.

Already dominates our ship shipments right now.

Yeah.

Our automotive Tds shipment reached.

Our automotive TDDI shipment reached around 1.4 million units in the fourth quarter last year, and we expect to ship considerably over 3 million units in Q1 this year.

Around $1 4 million units in the fourth quarter last year.

And we expect to ship considerably over 3 million units in Q1 this year.

Automotive TDI Queens us not only much higher contract value on a per panel basis, but it's also harder to compete.

Automotive TDDI brings us not only much higher content value on a per panel basis

but it's also harder to compete in for leg comp.

<unk> competed for commerce.

Automotive to Adi.

Automotive TDDI, still a relatively new technology, has become a major growth engine for us with the accelerating momentum expected to carry over throughout 2022 and the years ahead.

A relatively new technology has become a major growth engine for us.

The accelerating momentum we expect it to carryover throughout 2022 and the years alright.

Okay.

Looking at the automotive display industry trends.

The car market continues to embrace sophisticated display technologies and caters to interactive stylish and curved designs with ever-improving display resolution and image quality.

Car market continues to embrace sophisticated display technologies and caters to interactive stylish and curve device with ever improving display resolution image quality.

There is also a shift towards more and larger size displays per vehicle than ever before, all indicated in much more driver-by-user demand.

There is also a shift towards small and larger size displays per vehicle than ever before.

All indicating much more thorough as it demands.

Hymex is the market leader in automotive display driver business, covering the entire spectrum of products and technologies.

<unk> is the market leader in automotive display driver business covering the entire spectrum of products and technologies.

Including.

the industry's most comprehensive traditional DDIC product offering.

The industry's most comprehensive traditional DD IC product offerings.

as well as leading solutions for new technology areas such as TDDI, novel demon TCOM, uh...endo

<unk>, leading solutions for new technology areas, such as TDI, the ultimate T com.

The OTI.

OLED <unk>.

For automotive TDI, it's a technology that is essential for large size, stylish, and curved automotive displays.

For automotive Cdti's technology that is essential for large sized slit each.

Served automotive displays.

We pioneered the mass production of the new technology back in 2019.

We pioneered the mass production of the new technology back in 2019.

And heft shipped cumulatively millions of units since.

and have shipped cumulatively millions of units since.

We continue to dominate our new project design wins with direct and indirect customers across the continent.

We continue to dominate new project design wins with direct and indirect customers across the continent.

For larger loans, so the inches slim and curved automotive displays.

for larger than 30 inches, slim and curved automotive display.

We again led the industry by introducing cutting edge LCD technology that strives for seamless incorporation of sophisticated touch features with smart light chip design and architecture.

We again led the industry by introducing cutting edge OTT she.

Stripes for seamless incorporation of sophisticated plus features we smother it ship design architecture.

We are encouraged by the progress made in recent quarters have increased design win coverage across panel makers and engaged multiyear with Oems for them to incorporate all the OTT into their new vehicle models.

We are encouraged by the progress made in recent quarters, having increased design wind coverage across panel makers and engaged more tier 1s and OEMs for them to incorporate our LTDI into their new vehicle models.

Some of them are slated for mass production starting the first half of 2023.

Some of them slated for mass production starting in the first quarter. The first half of 2000 and for the Street.

With the commencement of TDI must production and OTT.

with the commencement of TDD-IMOS production and LTTI They're out

We are confident that overall.

We are confident that our overall market share in the automotive display driver market will continue to rise.

Sure in the automotive display driver market.

We'll continue to rise in the coming years.

Next, on smartphone and tablet business.

Next on smartphone and tablet business.

We expect Q1's smartphone IT business to decline double digits sequentially.

We expect Q was.

<unk> business to decline double digits sequentially.

Challenged by slowing sales in the global smartphone market inventory held in stuck by.

challenged by slowing sales in the global smartphone market, inventory held in stock by smartphone makers, and last but not least, longer production cycle of a new product, a factor which is specific to Himex, but only during this quarter.

Smartphone makers and last but not least longer production cycle of a new product.

Effective pushes specific though higher mix bony.

During this quarter.

In Q1, amidst the worldwide smartphone slowdown, we strategically initiated a product transition plan for key customers' next-generation new designs that support higher frame rate, ultra-thin bezel, and higher-resolution vision.

In Q1.

Amidst the always smartphone slowdown we strategically initiated a product transition plan for key customers next generation new designs.

Port keto friendly rate Usher is the peso and higher resolution fishes.

The new generation products is designed with small masking layers, and therefore requires longer production time, which, during the first quarter of production, will lead to less output.

The new generation products.

If the site with small masking layers and therefore requires local production tons, which during the first quarter of production will lead to less output.

The product output is expected to be back to normal starting from the second quarter.

The product's output is expected to be back to normal starting from the second quarter.

Our tablet sales are expected to decline with a single digit in Q1 due to worldwide tablet market adjustment from a high level.

Our tablet sales are expected to decline mid.

Single digit in Q1 due to worldwide tablet market adjustment from a high level.

However, our <unk> sales bucking the seasonality.

However, our TDDI sales, akin to seasonality, are expected to be up low single digits sequentially in the first quarter, benefited by the proactive adoption by all leading non-iOS tablets names of our TDDI solution.

It to be up.

Low single digits sequentially in the first quarter.

Benefited by the proactive adoption by all leading Knowhow is typically things of our TDI solutions.

We continue to see an acceleration in TDD penetration for tablets for Lloyd's surgeon niche for larger size displays title for them right.

We continue to see an acceleration in TDD app illustration for tablets, following surgeon needs for larger size displays, higher frame rate, and active stylus features.

Active stylus features.

Is the dominating tablet Joe is your supplier for this sort of the old and the oil is typically it phases out.

as the dominating tablet driver-as-you-supplier for literally all of IOS tablet vendors.

our TDDi solutions continue to gain traction and are adopted broadly in customers' next-generation tablet products.

Our <unk> solutions continue to gain traction.

And.

Adopted broadly in customers' next generation tablet products.

Among all, we are seeing fast-expanding education tablets, where our tablet TDDi with Active Status feature has been widely adopted by several leading Chinese players.

Or we have seen first expanded education tablet.

<unk> with active stylus feature.

It's been widely adopted by several leading Chinese players.

Turning to the pay per driver business another product in our small and medium sized drove a lay up.

Turning to the e-paper driver business, another product in our small and medium-sized driver lineup.

Our e-paper business, which currently only represents a small portion of total sales, is set to grow by more than 100% sequentially and more than 240% year-over-year in Q1.

Our <unk> business, which currently only represent a small portion of total sales is set to grow by more than 100% sequentially and more than 240% year over year in Q1.

driven by the early ramp-up of projects with leading customers and backed by long-term supply agreements.

Driven by the early ramp up of projects with leading customers.

By long term supply agreements.

We are collaborating with world-leading e-paper customers for certain ASIC projects.

We are collaborating we swore leading your cable customers for certain <unk> projects.

On the next generation products.

This consolidates our market presence in the emerging e-reading and e-signage segments from 2022 and onward.

This consolidates our market presence in the emerging E reading and refinish sequence from 2022 and onward.

Next for an update on air molded.

Hymex continues to gear up for the air-motor driver's development in partnership with major Chinese and Korean panel makers.

<unk> continues to queue up for the AMOLED driver IC development in partnership with major Chinese and Korean panel makers.

In Q1, our flexible air-modeled drivers and T-con for automotive applications successfully ramped up for customers' flagship EV models.

In Q1 or fiscal AMOLED driver and T com for automotive application successfully ramped up for our customers.

Flagships EV model.

The number of awardee projects for our automotive OLED ICs is growing with further EV mount vendors.

The number of awarded projects flow automotive OLED Ics is growing at least for the email vendors.

In addition, our outlet for tablets is expected to commence mass production in the second quarter of this year.

In addition.

OLED <unk> for tablet.

<unk> to commence mass production in the second quarter of this year with Chinese panel makers.

As for smartphone, we continue to commit R&D resources to AMOLED driver IC through engagement with top tier customers.

As for smartphones, we continue to commit our R&D resources to AIRMODEL DRIVER ICs through engagement with top-tier customers.

In view of serious constraints on all that display driver capacity in the next few years, we have also secured meaningful capacity for smartphone OLED drivers.

You view of serious trends all OLED display driver capacity in the next few years, we have also secured meaningful capacity for smartphone OLED drivers.

Now let me share some of the progress we made on the non-drive I.C. distances.

No let me share some of the progress we've made.

The non driver IC businesses.

Let's start from the timing controller.

We anticipate Q1 comp sales to decrease single digits sequentially as a result.

We anticipate Q1 T-con sales to decrease single-digit sequentially as a result of weaker demand in TV and Chromebook novel sectors.

Demanding TV and chromebook.

Noble sectors.

However, on a year over year basis, pecan sales will be up around 50%.

However, on a year-over-year basis, T-con sales will be up around 50%.

We are optimistic about the long term growth prospects of the telecom business, where we have successfully position ourselves for higher end and higher value added areas, including full case slash AK TV gaming monitor.

We are optimistic about the long-term growth prospect of the T-Con business, where we have successfully positioned ourselves for higher-end and higher-value-added areas, including 4K slash 8K TV, gaming monitor, and low-power notebook, in view of the consumers' pursuance of various new types of entertainment for film, television, and gaming.

Low power notebook you view of the consumers.

<unk> of various new types of entertainment for film.

TV and gaming.

Additionally, we extend our telecom product reach into automotive and gaming TV markets.

Additionally, we extend our T-Con product reach into automotive and gaming TV market.

Our cutting-edge automotive logo deeming T-Con has won numerous awards and penetrated into OEMs and tier-one carmakers' new premium models.

Regarding Asia automotive local dimming T. Con has won numerous awards.

Penetrated into Oems and tier one comment because new premium models with some of them slated for mass production starting in the second quarter of 2032.

with some of them slated for mass production starting the second quarter of 2022.

In the gaming TV market, we also lead in the industry by introducing the world's first 288Hz AKTV T-CON in collaboration with major TV panel makers.

In the <unk> TV market. We are also leading the industry budget you can see in the worlds first 280 acres AK TVT come in collaboration with major TV panel makers.

We believe the Chico's segment will be one of the trading forces for our non driver business.

We believe the Qigong segment will be one of the driving forces for our non-driver business.

Moving forward.

Now switching gears to the ultra-low-power AI image sensing total solution, which incorporates HIMAX ultra-low-power CMOS image sensor, our proprietary AI processor, and CNN-based AI algorithm.

Now switching gears to the ultra low power AI image sensing Pablo solution, which incorporate high mix also.

Hello policy, most image sensor all proprietary AI processor and CNN based algorithm.

As reported earlier, the sizable order for a top tier them customers menstrual application.

As reported earlier, the sizeable order for a top-tier NAMP customer's mainstream application successfully entered mass production in Q4 last year.

Successfully enter mass production in Q4 last year.

Marking another impressive milestone for our newly <unk> business, we did just one year since our initial release.

marking another impressive milestone for our new AI business within just one year since our initial release.

We will give further details after the end customer's official announcement.

We will give further details after the end customers' official announcement.

We've also made good progress on this <unk> application with other leading vendors.

We have also made good progress on this mainstream application with other leading vendors where the number of design projects is increasing as we speak. In addition to the

The number of design in projects is increasing as we speak.

In addition to the success story I just mentioned.

The second application, we expect to see significant volume.

The second application we expect to see significant volume is in automatic meter reading, or AMR.

In automatic.

Mr. Reed R R.

Okay.

Our AI solution has been widely adopted by numerous customers across a wide geographical area in China.

Sure.

Our <unk> solution has been widely adopted by numerous customers across a variety of.

Geographical area in China.

Our policy with AI cameras deployed or the existing installed base of traditional water meters.

our power-saving AI cameras deployed over the existing installed base of traditional water meters.

enable the water meter to automatically collect consumption data with AI operating locally on the edge.

Enable the water meter to automatically collect consumption data with AI operated locally on the edge.

The device transmits only by sized middle data to the silver fulfilling an income detection of.

The device transmits only bite-sized metadata to the server for billing and in-time detection of abnormal consumption or leakage, eliminating the need

No more consumption or leakage.

Eliminating the need for manual already.

The battery pack has a lifetime of over five years, greatly outperforming conventional AMR solutions, which usually are in a bulky form with large battery packs and without local AI capability, have to transmit massive image data to the cloud to perform either.

The battery pack has a lifetime of over five years.

The outperforming conventional M.

Solutions, which usually are in the bulky form.

Battery packs and with our local AI capability to transmit massive image data to the cloud to performing regions.

We already seen accelerated deployment of our AI solutions to a wide range of applications, including notebooks, home appliances, utility meter, automotive, battery-powered surveillance camera, panoramic video conferencing, and medical, among other things.

We are already seeing accelerated deployment of our AI solutions to a wide range of applications, including notebook whole appliances utility meter.

Multis battery powered surveillance camera.

Panoramic video conferencing and medical among other things.

Moreover.

New design sockets.

New design sockets are on the way as we look to leverage the collaboration with leading cloud service partners, such as Microsoft Azure and Google TensorFlow, on their Edge to Cloud platform to drive further adoption on applications such as smart home, smart office, healthcare, agriculture, retail, and factory automation.

As we look to leverage the collaboration with leading cloud service partners such as Microsoft issue.

<unk> tens of flow.

Only our edge to cloud platform to drive further adoption of applications, such as Smart home Smart office health care, agriculture, retail and factory automation.

Last but not least we have seen numerous design in activities.

Last but not least, we are seeing numerous design-in activities of our AI solutions for endoscope.

Our AI solutions for endoscope.

An area we are extremely excited about.

an area we are extremely excited about that may represent an extraordinary game-changer for the health examination industry. We will report

That may represent an extraordinary game changer for the hills examination industry.

We will report more details in due course.

We are very encouraged by the traction this relatively new product line has generated.

We are very encouraged by the traction these relatively new product line has generated.

in a short amount of time and expect to see increasing sales contributions throughout 2022 and beyond.

In a short amount of time.

Spec to see increasing sales contribution through 2022.

Yes.

Lastly.

given the recent surge of interest in the metaverse and immersive technology.

Given the recent surge of interest in the metal versus immersive technologies.

I'd like to give an update on our optical-related product lines to which we have committed years of R&D efforts.

Like to give an update on our optical related product lines to which we have committed years of R&D efforts.

our air course, WLO, and 3D sensing. Three separate.

Our <unk> <unk> and <unk> sensing.

Three separate optical related technologies, mainly individually or combined play a key role in enabling <unk> devices.

may individually or combined play a key role in enabling metaverse devices.

To help users transit and connect seamlessly between AR slash VR devices and realize the right display.

To help users transit and connect seamlessly between stretch VR devices and realize.

The right display and <unk> technologies are vital.

The losses.

AR glasses consider one of the ideal displays for metaverse application.

One of the ideal displays for metal versus applications.

Fisher vision of plantation onto the real world environment.

feature vision augmentation onto the real world environment.

Who are users six through the classes with virtual objects and or digital twins or realize objects projected by AI engines onto the classes.

where users see through the glasses with virtual objects and or digital twins of real life objects projected by AR engines onto the glasses.

For this high mix showcases from it close Michael display.

For this, HIMAX showcases frontlit Aerocosmic display, one of the tiniest display modules that offers significantly higher brightness, lighter weight, and lower power consumption.

One of the tiniest display modules that offer a significantly.

Hi.

Higher brightness lighter weight and lower power consumption.

or making the technology idea for AR headset.

Or making the technology idea for your headsets.

To further enable AR classes, we offer WAO Waveguide.

To further enable our classes, we offer <unk> web site.

that propagates light patterns from the air hole display in a predefined path towards the ice. Furthermore, for virtual objects reconstruction or digital wind formation.

Propagates led patents from the vehicle displays in a predefined test towards the ice.

Furthermore.

For virtual objects reconstruction or dish to digital wins formation.

HiMX provides industry's leading WO and 3D decoding technology.

<unk> provides industry, leading <unk> and <unk>.

The coating technologies.

which are essential in enabling both structured light and TOF or time-of-flight 3D sensors.

Our essential.

April in both socialize and POF or time of flight should essentially.

The three D sensing technology when combined with image sensors can also enables treaty base gesture recognition.

The 3D sensing technology, when combined with image sensors, can also enable 3D-based gesture recognition, eliminating the need for handheld controllers and enhancing perception of the environment, which making the ideal technology for contactless interface for AR, VR devices.

Eliminating the need for handheld controllers, enhancing perception of the environment, which linking their ideas and Clos useful.

Contactless interface for AR VR devices.

In all these technologies I just mentioned, we have a market-leading position with our technology already embedded in various products of quite a few of the biggest tech names in the business.

In all these technologies I just mentioned, we have a market leading position with our technology already embedded in various products.

Quite a few of the biggest tech names at the business and have shipped hundreds of millions involved with proven production with proven.

and have shipped hundreds of millions in volume with proven product development and manufacturing track records over the years.

Product development and beneficial manufacturing track records over the years.

Yeah.

While Metaverse is still years away from mass-volume deployment, Hymex is at the forefront of these key technologies to enable the industry, and we are ready to bring the Metaverse to life through partnerships with tech industries' leading players who are aggressively investing in the space.

While met ours is still years away from us volume deployment.

<unk> is at the forefront of these key technologies to enable the industry and we are ready to bring the maneuvers to life through partnerships with Tech industries, leading players who are aggressively investing in this stage.

We will not Miss the next big thing.

We will not miss the next big thing.

and are ready to seize the opportunities ahead. We will report additional progress in this new arena as it continues to develop.

And are ready to seize the opportunities ahead.

We will report additional progress in this new arena.

He continues to develop.

For non driver IC business, we expect revenue to decline high teens sequentially in the first quarter.

For non-drive I.C. business, we expect revenue to decline high teens sequentially in the first quarter.

That concludes my report for this quarter. Thank you for your interest in Hymex. We appreciate your joining today's call and are now ready to take questions.

That concludes my report for this quarter. Thank you for your interest in <unk>, we appreciate youre joining todays call.

And are now ready to take questions.

Yes.

Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star then the one key on your touch phone telephone. To withdraw your question, you may press the pound key. Please stand by while we compile the Q&A roster.

Ladies and gentlemen, if you'd like to ask a question at this time you will need to press. The Star then the one key on your Touchtone telephone to withdraw. Your question you May press the pound key please standby will be compile the Q&A roster.

And our first question coming from the line of Tristan <unk> with Baird. Your line is now open.

And our first question coming from the line of Tristan Garrett with Baird, the Atlantic Southwind.

Hi, good evening.

Im trying to reconcile the commentary that you had on the call about.

I'm trying to reconcile the commentary that you had on the call about panel inventory adjustments.

Pat or inventory adjustments.

It also.

and also, you know, some weakness in smartphones with supply expected to remain tight. So, if you could help us understand, you know, understand that you're improving your mix, but are you expecting those panel inventory adjustment to basically,

Some some weakness in smartphones.

With supply expected to remain tight so if you could help us understand I understand that you're improving your mix.

Are you expecting those channel inventory adjustment to.

Basically.

adjust very quickly in which case then is the reason why you expect your supply to remain tight or is any other factors that I should be considering to reconcile the two.

And just very quickly in which case then.

Is the reason why you expect supply to remain tight oil is.

Any other factors that I should be considering to we can say that too.

Thank you Tristan.

Thank you, Tristan. I understand your question is directed towards only smartphones, am I correct?

I understand your question is directed towards only smartphone am I correct.

Well, even overall, because I figure that if there's panel inventory adjustment, eventually it can have an impact on the overall demand, even though you mentioned that. Actually, I think the commentary that you had for panel inventory adjustment was, if I heard well, in the large panel driver IC business.

Well, even though overall because a figure that it has had an inventory adjustment eventually it can have an impact on the overall.

Demand even though.

You mentioned that actually I think the connectivity that you had for panel inventory adjustment.

If I heard well in the large panel driver IC business.

Right Okay.

Well, firstly, on smartphones, I mean, I think everybody understands the market is relatively slow.

Firstly on smartphone.

I mean, I mean, I think everybody understands the market is relatively slow.

globally. Having said that though, I think we are

Sure.

Globally.

You said that though I think we are.

Relatively new from the slow market in the sense that we have relatively small exposure to the smartphone market with our sales currently only about 20% go into smartphone.

are relatively immune from the slow market in the sense that we have relatively small exposure to the smartphone market with our sales currently only about 20 percent going to smartphone uh and limited ironically limited by capacity as we reported repeatedly right in the past

Limited Ironically limited by capacity as we reported repeatedly either.

First.

And as I will admit, I do not have very good visibility on smartphone when, as you correctly mention, you know customers do have inventory pir up.

And.

I don't have very good visibility on smartphone.

Quinn.

Correctly dimension customers do have.

Inventory pile up.

However.

Again, we we mentioned before our pool of capacity for smartphone and tablet.

It's the same pool, it's the same thing, right? So with the same limited amount of capacity available to us, we still have to make the choice of supporting tablet over smartphone, because in tablet, we simply have a much higher market share with customers relying upon HIMAX a lot more than smartphone.

It's the same pool is the same thing right. So we saw some limited amount of capacity available to us.

Still have to make a choice of supporting.

Sure.

Uh huh.

Tablet or smartphone.

Because in February we simply have a much higher market share with customers regarding upon highlights a lot Paul.

The smartphone.

So.

On a combined basis these two sectors who wishes.

About 40% of our total sales more than 40% of total sales combined.

We are still running at a pretty serious shortage, although so I guess the.

Is.

When we say the market visibility is limited, I think if I speak to the customer across the board, whether it's smartphone, tablet, or TV, or monitor, or notebook, I think

When we say the market is limited I think.

I'll speak to the customer across the board, whether it's smartphone tablet or TV monitor or notebook.

I think.

other than the very exception of automotive, where we remain super positive.

Other than the very exception automotive clearly remains super positive.

the shortage there is severe and we just, you know, are begging our foundries and the customers are begging us to ship more, right? So if I put that aside, all other sectors, I would have to say when I talk to customers across the board, nobody, while nobody has very upbeat gross prospect year over year, no one is also predicting a major decline.

The shortage there is severe and we just.

Picking a foundry that our customers are begging us to ship more right. So if I put other sites or other sectors. I would also say with a total customers across the board nobody nobody has very upbeat.

Gross prospect year over year.

No. One is also predicting a major decline either.

and that is a reflection of low visibility that we just, you know, uh...

And that is a reflection of low visibility, but we just.

No.

It is already.

However, on this level of demand, last year, we, as well as the whole industry, was running at a pretty severe shortage. And we also see no major capacity increase, right, at least throughout the entire 2022. So last year there was a shortage.

However on this level of <unk>.

Demand last year, we as far as the whole.

The whole industry was running at a pretty severe shortage.

<unk>.

We also see.

No major capacity increase at least throughout the entire 2022 right. So last year there was a shortage this year.

is going to shrink in a meaningful way. So I think that is why, as well as our peers are, and our foundry partners as well, in fact, are saying, you know, the shortage is likely to remain. That doesn't.

Highly highly unlikely that demand is going to shrink in a meaningful way. So I think that is why as far as our peers.

And our wholesale partners as well in fact.

<unk>.

The shortage is likely to revert.

And certainly I think.

We.

If there is if there should be a demand recovery, whether it's Q2 or the second half I think <unk>, certainly will become more severe and vice versa.

If there is, if there should be a demand recovery, whether it's Q2 or the second half, I think shortage certainly will become more severe and vice versa.

Which again, we have limited visibility. We Don T have to watch the market very closely.

Which again, we have limited visibility, we just have to watch the market very closely.

I don't know if that answers your question Tristan.

Yeah, no, I certainly appreciate the color. And then for my follow-up, I'm looking at the gross margin implications. So it sounds that as wafer pricing continues to go up, you weren't able to offset that or fully offset that in Q1. And thus, that brings basically a little bit of a sequential decline in gross margin.

Yes.

Certainly I appreciate the color and then from a follow up.

And I'm looking at the gross margin implications so it sounds that.

Wafer pricing continues to go up.

You were unable to offset that.

<unk> said that in Q1.

That green basically.

Visibility sequential decline in gross margin.

Given what you've mentioned about demand and supply, do you think that you have the ability to have pricing match further wafer price increases throughout the year given the supply constraint that you've mentioned? Or do you think that the inventory adjustment will prevent you from having, you know, pricing that will match your higher cost beyond Q1?

Given what <unk> mentioned about demand and supply do you think that you have the ability to have pricing match.

Further wafer price increases throughout the year.

Given the supply constraints that you've mentioned or do you seeing that.

Inventory adjustment will prevent you from having.

Pricing that will mature higher cost beyond Q1.

I think firstly we are not seeing a major or meaningful further price increase or function.

I think firstly, we have not seen.

Major or meaningful for the price increase for foundry.

From this point or at least not in this year right.

from this point of view, at least not in this sphere.

Sure.

So our higher cost in this quarter is a reflection of.

So our higher cost in this quarter is a reflection of the pricing which took place in June 4.

The the pricing.

Which took place in Q4.

Compared to Q3 right so.

This is how our business goes, right? We negotiate a price, we agree a price with the foundry. We then place order and they start fabrication process for us, which typically will then take three months and you pause a little bit for back end. So that becomes the shipment. So Q4, we will start, becomes the Q1 shipment.

This is how we all business goals right.

Negotiated price real price with a foundry.

Yes.

Place order and they stopped fabrication process for us, which typically will take three.

Three months, you cause a little bit for backend so that becomes the shipment. So Q4, we will start becomes the Q1 shipments.

So the new prices, we agree we sponsored during Q4 become our cost for Q1.

So, the new prices we agreed with Foundry during Q4 become our cost for Q1, and Q3

In Q3.

Poundry price was higher than that of Q3, sorry, let me repeat, Q4 Poundry price was higher than that of Q3, meaning our Q1 shipping cost will be higher than that of Q4. I don't know if that is clear. And that explains why we have this short-term decline in Poundry prices.

Price was higher than that of Q3, two sorry, sorry, Dmitry repeat Q1 foundry price was higher than that of Q3 million. Our Q1 shipping costs will be higher than that of Q4 <unk>.

This is clear.

And that explains why we have this short term decline in.

<unk>.

In.

in gross margin, a little bit of decline. Because our customers are basically telling us, hey, you know, you have upped your prices a lot last year. And now the market is slowing down and we really cannot accept further price up. So although our foundries are also telling us the same thing, right? They are saying, well, it looks like the market cannot accept a furthermore price hike.

In gross margin a little bit of decline because our customers are basically telling us hey.

You have up your prices a log lost last year.

Now the market is slowing down and we really cannot access for the price up.

So although our foundries are also telling us the same thing they are saying it looks like the market cannot a sub.

Furthermore, price hikes.

So although the foundry is saying the same thing to us, however, the price hike that took place in Q4 already was built into our Q1 cost. And that explains.

So although the funds.

The same thing to us however, the price hike that took place in Q4 already building into our <unk> cost and that explains the.

a little bit of squeeze, you know, cross-margin. Now, going forward.

A little bit of squeezing our gross margin now going forward.

Again, when I talk to all my foundry partners, no one is projecting further meaningful foundry price this year. For the simple fact that if they raise the price further, the market may not be able to accept it, given the overall market environment right now.

Okay.

When I talked to all my foundry.

Partners.

No one is projecting further meaningful.

Sure.

Foundry price this year.

For the simple fact that.

<unk>.

If they raise the prices for the market may not be able to sublease given the overall market environment right now.

However, despite the slow market, our customers are not squeezing us hard for price down. Why? Because our customers like us and like our foundry partners, we all still worry about the overall tightness of our foundry capacity.

However, despite the slow market our customers are not squeezing us hot four presto, why because our customers like us and like our foundry partners. We all still worry about the overall tightening of foundry capacity.

So we are kind of reaching a balance.

So we are kind of reaching a perilous how long the business is going to us I have no idea as I said for the second half.

how long the balance is going to last I have no idea as I said if the second half

the we we see a rebound in demand then it will be good news for us and vice versa right so i think it's too early to tell however i think we are a lot more confident on our top nine growth this year uh than gross margin

We see a rebound in demand then you will be good news for us and vice versa. So I think it's too early to tail. However, I think we are a lot more confident on our top line growth this year.

And then gross margin wishes last year was 48, 5% is pretty high level. So we can further expand on the 48, 5% of last year I have no.

last year was 48.5%. It's a pretty high level. So whether we can further expand on the 48.5% of last year, I have no total confidence. But we also don't think we will depart too much from that if we have to go a little bit lower. So with higher top line growth.

Total confidence, but we also don't think.

We want to depart too much from that.

To go a little bit.

So we saw higher topline growth.

and a little bit of uncertainty on gross margin, we still remain pretty good confidence on our bottom line as well. I think that's a quick summary of the full picture of our 2022 outlook. Great. That's very useful.

So the gross margin, we still remain pretty good confidence.

Bottom line as well I think thats the.

A big picture of.

A quick summary of the full picture of our 2022 outlook.

Great.

Very useful thank you very much.

Thank you Tristan.

And our next question coming from the line of Jerry <unk> with Credit Suisse. Your line is open.

Our next question coming from the line of Jerry Su with Credit Suisse, your line is open.

Yeah.

Thanks for taking my question.

Thanks for taking my question. Hold on, I just want to follow up on your comment on gross margin. As you mentioned that Foundry is less likely to further increase the price in this year. And then I think you also mentioned that automotive will probably be the largest contributor of your revenue.

Just wanted to follow up on your comment on gross margin.

As we've mentioned that foundry is.

That's right.

<unk> two.

To further increase the price.

In this year.

I think you also mentioned that the automotive part of it the largest.

Okay.

So with this dynamic, does that mean that your gross margin actually could at least hold at the current 46 to 48 percent level if the end demand does not change too much?

No.

Does this dynamic does that means that the gross margin actually could at least hold at.

<unk>, 46% to 48% level.

And demand has not changed too much.

I think thats, a fair assumption yes.

I mean, given, you know, all other things pretty much staying close to the current level, I think our mix is highly likely to improve, given the fact that we are very confident about our automotive sector outgrowing the others, while automotive in general enjoys a better margin.

I mean given.

All of the things pretty much stay in or close to the current level I think our mix is highly likely to improve given the fact that we are very confident about our automotive sector outgrowing.

The others are automotive in general enjoys better margin.

Then the wrist.

So given all other factors being similar to the current level, then yes, I think there's a good chance we may actually sustain or improve our cross-martial from this point onwards.

So given all other factors being similar to the current level debt, yes, I think there's a good chance we may actually.

Sustain or improve our gross margin from.

At this point onward.

Okay, got it. Hello. And just a quick follow-up. Yes. Thank you. Just a quick follow-up on the, you know, the Q1's guidance for the non-drivers, because I think you have guided...

Hello, just a quick follow up yes. Thank you just a quick follow up on the.

The Q1.

Our guidance for the non driver because I think you have guided.

Uh huh.

On driver but.

non-driver, but you only mentioned that timing control is declining single-digit. I'm just wondering, what is causing the non-driver business to see a double-digit decline? What's the missing point here?

You only mentioned that timing controllers declined single digits.

I'm wondering.

What is causing the.

The non driver businesses.

A couple of digit decline well.

What's the missing point of view.

I think.

T-Con, there's a short-term sequential decline, right? The Chromebook, TV, you know, being soft, et cetera, you know the story, right? So, having said that, I think we are...

T Con there is this a short term.

<unk> decline right the chromebook.

<unk> been soft et cetera, you'll know the story right. So having said that I think we are.

very confident about our TECOM growth for this year, year over year, I think overall.

Very confident of our telecom growth for this year year over year I think overall.

Because, you know, we mentioned, you know, we have positioned ourselves much better right now compared to a year ago, when whether it's TV, notebook, or monitor, we are focusing on higher-end products and having a stronger and more direct relationship with end customers, right? So we are fairly confident about T-Com growth.

We mentioned, we have position ourselves much better.

Right now compared to a year ago.

<unk> TV notebook monitor we are focusing on.

Higher end products.

Kevin.

Stronger and more direct relationship with end customers right. So we are fairly confident about E. Comm growth also in addition to that.

Our bundle sales approach, I think it's going to play a role here as well. Bundle sales means T-Comp bundles together with Stripe ISC. It's a total solution.

Our bundled sales of those I think it's going to play a role here as well.

Wholesale means means telecom bundled together with driver IC is a total solution.

So we are saying T-con sequential decline in this quarter will be a short-term phenomenon. For the whole year, we still remain confident.

So so so we're saying T con.

Sequential decline.

In this quarter will be a short term phenomena for the whole year, we still remain confident I think.

I think you were saying the decline for non-drivers over the missing points, I think it's in the CMOS immune sensor primarily.

You were saying the decline for non drive or the missing point I think is in the Cmos image sensor primarily.

A little bit on W.O.O. where, you know, a major customer's, their adequacy products is declining in volume, but that is playing much less impact on us now than before. C.I.S. where we have a major market share in notebook, and notebook short-term demand is not good, although notebook, I think

A little bit on <unk>.

Our major customers their legacy products is declining in volume, but that is playing much less impact on us now than before.

Crs.

We are a major market share in notebook and notebook.

Short term demand is not good although notebook I think.

If I may comment a little bit on <unk> outlook for this year.

If I make comment a little bit on CIS, I'll look fully.

The notebook marquee is undergoing a major upgrade in their camera from HD to Full HD.

The notebook market is undergoing a major upgrade in Cmos camera from HD to full HD right. So that is good news for us. So we are going to benefit.

So that is good news for us. So we are going to benefit, especially starting from second half of the year, from this trend. Having said that, I think Webcam, which was a major contributor last year.

Especially starting from second half of the year.

Uh huh.

From this trend, having said that I think.

What Ken.

It was a major contributor last year because of the Covid situation.

because of the COVID situation. And, you know, when you can offer your notebook, you buy a new webcam to support your video conferencing, right? So there was a major, major surge in demand last year, but with COVID, you know, hopefully, you know, leaving us, the webcam demand is likely to decline, right? So, I think we are,

When you can offer your Youll notebook you buy a new account to loss to pull your videoconferencing right. So so there was a major a major surge in demand last year, but with Covid.

<unk>.

Hopefully, leaving us.

So again demand is likely to decline.

So so I think.

We are building in that.

we are building in that assumption into our CIS forecast and that result in a slower CIS. And also, in Q1, we do see the trend of webcam having declined in projection.

That assumption into our forecast as a result.

Slower Crs and also in Q1 than we do.

Do see the trend of our Tam.

Declines in projections.

Okay got it. Thank you for the color and then maybe just one last question I think you spent some paragraphs discussing the comfort.

Okay. Got it. Thank you for the caller. And then maybe just one last question. I think you spent some paragraphs discussing the coverage.

Question is actually more related to the different display technology.

My question is actually more related to the different display technology. I think in the previous couple of years, you have been shipping the L-Code for some of the AR glasses, but I think more recently, we can see that some of the display technology has been shifting to OLED, silicon, and also potentially in the future.

Yes.

I think in the previous.

A couple of years have been shipped can be helpful for us.

Okay.

But I think more recently, we can see that now.

Display technology shifting to silicon and also potentially.

I just want to know, from your point of view, if you look at the L-cost versus the L2 technology, do you think that you have enough competence or breakthrough that can bring L-cost back to become the mainstream in the next couple of years?

I just wanted to know from your point of view, if you look at customers to be able to technology.

Do you think that you have.

Competence.

Great.

It can bring.

L costs back to become the mainstream in the.

The next couple of years.

Thank you Terry.

The question.

I think.

I think you correctly mentioned...

You correctly mentioned.

We have been in AR classes for many many years right and we are certainly I mean know that we are the pioneer in providing

We have been in AI causes for many many years right.

Certainly I mean, not that we are the pioneer in providing the key technology to enable causes wishes Michael display right.

technology to enable AR glasses, which is micro-display.

So we are, you know, products of, you know, literally all of the most notable air class.

So we are told us of.

Literally all of the most notable.

Cost.

products so far, although none of them have been a commercial success as we all appreciate.

Products, so far although none of them have been a commercial success.

Now I think the lessons.

Now, I think the lessons learned across the whole industry, us included, and most importantly, our wine customers through all these years is that we have finally come to a good consensus.

<unk>.

Across the whole industry is included and most importantly, our customers through all these years is that we have finally come to consensus is too high quite kind of a product or technology required is required to.

as to what kind of products or technology is required.

tool, for the industry tool.

And for the industry to.

put forth, uh, put forward a, uh, a

Put forward for put forward.

Sure.

Our glasses.

which is attractive enough for general public.

Which is attractive enough for general public.

So I'm not talking about fancy technology, I'm just talking about common sense, right? Firstly, you need to have a sleek design, fancy design, right? Similar to your sunglasses, with similar shape and weight, even, right? And that is the first requirement, very important.

Alright, so I am not talking about FMC technologies here I'm, just talking about common sense right. Firstly unit to have a 65 design quite similar to <unk>.

Your sunglasses with the similar shape and weight EBIT right.

And that is the first full quarter of the requirement very important.

Secondly, you need to have your display be in full color.

Secondly, you need to have video display.

<unk> full color.

And then this one is to provide over a decent image quality.

and then display needs to provide over a decent image quality.

and certainly affordable price, and lastly, but very importantly, a decent, large enough size of field of view, FOV. So all these are the required areas for a product which hopefully will really attract the attention of general public.

And.

Certainly affordable price.

Lastly, but very importantly.

Decent a large enough size.

Hey, Bob.

Yes.

So all these are.

The required.

<unk>.

Areas.

For a product, which hopefully will really attract the attention of general public.

and our products together with our customers in the past.

And our products together with our customers in the past.

you know, they meet many of such criteria, right? So throughout all these years, I think the industry has finally come to this conclusion that this is the target you are shooting for. So can we provide a technology? And I can tell you with a good degree of confidence that so far as of today, we can't, but we feel we are getting very, very close. That's a key message we want to deliver.

<unk> missed many of Susquehanna areas right. So throughout this year I think the industry has finally come to this guidance.

This is the tabular shooting for so can we provide the technology.

I can tell you with a good degree of confidence that sulfur as up to date, we can't but we feel we are getting very very close but the key message.

Sure.

So, back to your question, you know, how does our air course compare to other computing technologies for AR glasses?

So.

But to your question, how does <unk> compare to other competing technologies for AIG losses.

Hey, Augustus by definition is a see through.

AR glasses, by definition, is a see-through glasses device, right? i.e., you need to have...

Causes device right.

You need to have for <unk>.

what we call micro displays. Displays which are tiny and they have to sit on the side.

While we call Michael displace displays which are tiny in there to sit on the site.

near your ears, right? Because they can't sit in the front because that will block your side of view, right? So they need to sit on the side. Since they are sitting on the side, they would need some optical mechanism, including WebSkies, to lead the light, the image, into your front, right? So those are the basic fundamental requirements.

Your years right because they can sit in the front because our.

<unk> right. So you can see in the site.

Since they are sitting on the side they would need some optical retailing seven including Lyft guys to lead the light the image into your front right. So those are the basic fundamental requirement.

It doesn't matter what kind of display you use, you have to pass this, you have to go through this requirement. So,

As a matter of how far ahead of the display you use two positives.

<unk> lease requirement.

So.

So so.

So okay.

So, again, to achieve this basic requirement, and also the target specs, right, the target objectives of the general consumers.

To achieve this spacing requirements and also the target.

The target specs right the target objectives of the of the of the general consumers.

Most very importantly for micro display, you're talking about size, pricing, power consumption and cost.

Most very importantly for micro display you are talking about site.

Our pricing power consumption and cost.

you know they all we now have a good consensus what kind of target we need to make to achieve size, brightness, power consumption and cost.

We now have good consensus quite kind of hockey we need to make.

So you need to achieve to achieve sites brightness and power consumption and cost.

Firstly, on size, which is the most important, because without the right size, you just cannot make the fancy glasses, and that you go back to the previous failures, right? So size is the utmost, most important material. To achieve the right size, really, you're talking about, for a micro display, you can have two different types. One is what we call self-illuminating type. The other one is not.

Firstly on site, which is the most important because otherwise size you just cannot metaphen CE courses.

If you go back to the previous failures. So sites is the utmost multipolar material to achieve the right size.

Really you are talking about a formula display you kind have to put the right types. One is what we call service 70 illuminating type the other one is not.

The importance of self-illuminating type is that because it's self-illuminating, meaning you don't need an external

The importance of said, we don't need any type of is that.

Because it certainly illuminated.

Meaning you don't need external optical engine.

to enable the illumination, right? And once you have an external optical engine, the size, you fail the criteria already, so you are already out, right? So for self-illuminating technologies, you already narrowed down your candidate to three types, meaning AMOLED.

To enable that.

The elimination right.

External optical engine the size you further criteria already so you already out right. So for series and within technologies you already.

Your candidate two three.

Types, meaning more of it.

micro-LED and our front-lit L-cores. I emphasize front-lit, it's very important because other types of L-cores are not self-illuminating, including our other L-cores.

Michael Michael My call it sorry, Michael.

Micro OLED an hour from leap aircrafts I emphasize strongly it is very important because other types of course not.

Illuminate including our other costs.

from the module, because we are putting our LED alongside the micro display. And so from the customer's point of view, our display module is very similar in size and weight compared to micro LED and micro all the other self-illuminating technologies, right? So only these three types are self-illuminating and they can...

Frankly, as a module because we are we have put in our <unk>.

Alongside alongside the micro display and so from the from the customer's point of view our display module.

Very similar.

In size and weight compared to Michael.

Michael the other so illuminating.

Technology, sorry, so only these three types of sale eliminated.

Illuminated indicated only they can pass the first criteria most importantly, the sites.

Only they can pass the first criteria, most importantly, the site.

Now.

Now, the second problem is the brightness. The second biggest problem is brightness of the micro display. Why? Because I mentioned your micro display is sitting on the side. They need to pass the light through with guide in the front. With guide, there are a couple of mainstream technologies.

The second problem is the prices the second biggest property its brightness of.

The micro display.

Because I mentioned.

Your micro displays are sitting on the site the.

The into hospitals through our site front with guide there are a couple of our mainstream technologies.

you know, what we offer in our W.O. is certainly one of them. But, you know, regardless of which type of technology you talk about for Wolfgang, the line efficiency...

Offering.

Is certainly one of them but.

Regardless of which type of technology, you talk about the forward guide the light efficiencies very poor.

5% is now people's very, very difficult target right now, 5% like...

5% is now people very very.

Difficult target right now, 5% less efficient, meaning you've always seen most of your light robust mature there'll be alive through the traveling in the optical mechanism.

meaning you are wasting most of your light, vast majority of your light, through the travelling in the optical mechanism.

But the QMB requires certain brightness to see the display, right? So how do you, uh, how do you, uh...

But the <unk> requires certain partners to see the display right. So how do you.

How do you.

how do you resolve the issue, you need to have your micro display being very, very bright. Right, so this second criteria, again, it's very, very, it's vital, right?

How do you resolve the issue inventory, Michael the spreads being very very bright.

So.

So this particular criteria again is very good.

The top right. So from the second criteria is point of view in our view.

So, from this second criteria's point of view, in our view, micro OLED is already out, because micro OLED right now, it needs to improve its brightness by several.

Michael It is already out because micro OLED right now you need do you need to improve brightness by several orders of magnitude.

It's just unachievable in any foreseeable future in our view, right? Because it's just simply too dark.

Just by receivable in any foreseeable future in our view right because it's simply too dark.

So the other.

So the other, so now you are leaving with our air-cooled cycle display, which has enough, right?

So no your linear with our agricultural display which has been our practice.

And also sorry.

and also micro-LED, however, for micro-LED, indeed they can project with enough brightness, but micro-LED can only monochrome color in the display, so to make color display, I mentioned that's a fundamental requirement as well, they need RGB three panels combined.

However for Michael.

They can project, which in uprightness by Michael.

Only monochrome color display.

To cover these color display I mentioned, that's a fundamental requirement as well.

Our <unk> III panels combined.

And when you have RGB you operate in Europe sized test okay.

And when you are RGB, you are failing your size test again, and also you are failing your power consumption test, not to mention your cost test.

And also you are trading your power consumption test not to mention your cost test. So while there are talks about customers using Michael Rowe.

So while there are talks about customers using microLED, from our insider's point of view, I think they have such hurdles and challenges.

From our insider's point of view I think they have floor.

Such hurdles and challenges.

Just inconceivable to.

inconceivable to get around in any foreseeable future.

To get around.

In any foreseeable future.

Now, finally, back to our own front-lit air-conditioned micro-display.

Now finally back to our front lit <unk> micro display.

Admittedly, we introduced technology years ago years ago, but.

Admittedly, we introduced that kind of technology years ago, but we kind of slowed our development over the last couple of years. Why? Because the market was simply not there.

But we kind of slowed our development over the last couple of years why because the market was simply not there.

However, we never stopped talking to our customers now with this renewed a very vibrant in towards a meta was recently, we have seen a very renewed interest cost.

However, we never stopped talking to our customers. Now, with this renewed and very vibrant interest on Metaverse recently, we are seeing a very...

You know, of course, again, so they are customers who are trying to.

Of course again, so they are customers who are trying to.

Uh huh.

utilize our existing from the Aircos products in their next generation design, which admittedly is not ideal, right? They don't really exactly pass all the factors I just mentioned. However, there are also customers who are taking a longer term approach and they are working with us, starting from specs, discussions, and code joint development.

<unk> utilized our efficient frontier of course product in there.

Next generation design.

Admittedly is not ideal right. They don't exactly plus all the factors I. Just mentioned however, there are also customers who are taking a longer term approach and they are working with us starting from specs discussions and cold joint developments.

for a idea from the Air Force is not really feasible, you know, of all criteria I just mentioned. And we are truly confident the technology is there. We just need a little bit of time and resources to make it happen. So that is, I apologize for a slightly lengthy response, but this is a complicated issue. And I appreciate you asking the question and giving me the opportunity to explain.

Got it.

From the ecosystem that really fits the appeal of all criteria that I just mentioned and we are truly coveted the technologies. There, we just need a little bit of time and resources to make it happen so that is.

I apologize for a slightly lengthy response, but this is a complicated issue and I. Appreciate you asking the question and giving me the opportunity to Iceland it.

Okay.

Yeah.

Alright detailed question and help us to understand a lot about the difference between the technologies. Thank you.

very detailed question and help us to understand a lot about the difference between these technologies. Thank you.

Thank you for the question.

Okay.

Our next question coming from the line of Donny Chien with Nomura Security. Your line is open.

Next question coming from the line of Donington with Nomura Securities. Your line is open.

Hi, Jordan, Eric. Thank you for taking my question I just have two very short questions. The first one is that.

Hi Jordan, Eric, thank you for taking my question. I just have two very short questions. The first one is that

It sounds like backacinthey last year original I think we were relatively positive from the first quarter although.

It sounds like back in the last two originally I think we were relatively positive on the first quarter outlook.

and then maybe after this one to two months the market has been a little bit weaker than expected so just just curious about that uh what kind of products uh in that has been uh weaker than what you have seen maybe in before one and two months ago uh for example it's like smartphone or tablet or any other applications that you are seeing or weaker than expected and

And then maybe after this one to two months the market has been weaker than expected. So just curious about that.

What kind of products.

And that has been.

Weaker than what you have seen maybe.

Two months ago.

Okay imports like smartphone or tablet or any other applications that you are seeing a weaker than expected demand.

The past one to two months.

and secondly is regarding to the gross margin again so i remember that automotive driver ic gross margin should be higher than operate f

Secondly is regarding to the gross margin again so.

I remember that automotive driver IC gross margin should be higher than corporate average so I'm just curious.

So I'm just curious that if looking at the fourth quarter gross margin and the first quarter gross margin.

If looking at the fourth quarter gross margin in the first quarter gross margin.

What do you make of it?

The automotive piece.

Driver IC gross margin all higher than corporate average and these two quarters or is also declining a little bit in the first quarter. Thank you.

Firstly on the first quarter outlook.

Firstly, on the first quarter outlook

I think.

I think your impression about, like, slowing the market demand, I think we kind of get a similar feeling. I think it's primarily for smartphones.

Do impression above.

Slowing market demand.

We kind of get similar feeling I think it's primarily for smartphone.

Sure.

And again, automotive remains very strong, and TV, I think, overall is slow. Although we feel there are talks about customers assorting their inventory, and hopefully starting from Q2, or the second half, there will be renewed demand coming from.

And again over multiple remain very strong.

And.

Our TV I think overall, it's a slow although we feel they are possible customers.

Customers are shopping their inventory and hopefully starting from Q2 or the second half there'll be renewed demand coming from TV and the.

And actually, the visibility is not great in the sense that...

The visibility is not great in the sense that.

you know, and customers are revising up their forecast. Rather, they are staying on the sideline, but they are not revising down their forecast either. Right? So I think your impression of a slowing down forecast may be primarily driven by smartphone.

And customers are revising their forecasts rather.

They are staying on the sidelines, but they are not.

Driving down their forecast either right. So I think.

Your impression of slowly focus may be primarily driven by smartphone.

Your second question about automotive, I think...

Your second question about automotive I think.

Core gross margin and related automotive I think in.

course margin and related to automotive, I think in

<unk>.

I think certainly automotive is gross margin higher than our average and I think more importantly the visibility is much better as well. Visibility not in terms of just sales forecast but also in terms of price.

I think certainly automotive is gross margin higher than our average and I think more importantly, the visibility is much better as well.

Our visibility in terms of in terms of just sales hotels, but also in terms of pricing.

Right. I cannot say I have very strong visibility for TV monitor, notebook.

I cannot say I have very strong visibility for TV monitor notebook allows.

or other things, but I can say with good confidence, there will be a bit of price involved. So I think that's an important factor. And also, overall, I think...

A lot of things, but I can say with confidence that visit video pricing volatile. So I think thats very important factor.

So overall I think.

In Q1, for example, large display driver, I think based on our guidance, it's going to be about flat, while overall guidance is slower, right? And large display driver has lower gross margin compared to Q1.

In Q1 for example, large display driver.

Uh huh.

I think based on our guidance.

It's going to be about flat.

Overall guidance slower and loss of display driver has lower gross margin compared to.

last year compared to a small smartphone or tablet or certainly old. So I think that also explains partially.

Last year compared to a small smartphone or tablet will certainly also so I think that also explains partially.

the lower gross margin on top of the explanation I gave to Tristan earlier.

The lower.

Gross margin on top of the explanation I gave to ship earlier.

Okay got it so just just to clarify so in terms of the <unk>.

Okay, I got it. So just to clarify, so in terms of the ranking of the gross margin, it's like auto, the highest, right? And followed by...

<unk> gross margin is like all towards the highest right and followed by.

largely like small, medium drive IC, and lastly, large input drive ICs. Is that correct? Correct.

Largely like small medium driver IC and lastly, large display driver Ics is that correct.

Correct.

Okay. Thank you so much Jordan.

Thank you Tony.

Okay.

Okay.

And Im showing no further questions at this time I would now like to turn the call back over to Tony for any closing remarks.

And I'm showing no further questions at this time. I would now like to turn the call back over to Julie for any closing remarks.

As a final note, Eric Lee, our Chief PR Officer, will maintain investor meetings.

As a final note.

Our chief peer office will maintain investor meeting.

marketing activities and continue to attain VISTA coverage.

Just in activities and continue to obtain investor conferences, we announced the details as they come up thank you.

We will announce the details as they come about. Thank you and have a nice day.

Have a nice day.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.

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Hello, Ladies and gentlemen, welcome to the Helix Technologies, Inc. Fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session to ask a question. During this session you will need to press. The Star then the one key on.

Hello ladies and gentlemen. Welcome to the HEMICS Technologies, Inc. fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To ask a question during this session, you will need to press the start and the 1 key on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mark Schweilenberg from MC Group.

You touched on the telephone.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Mark Weinberg from MZ group.

Thank you. Welcome everyone to HIMAX's fourth quarter and full year 2021 earnings call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer, Ms. Jessica Pan, Chief Financial Officer, Mr. Eric Lee, Chief IRPR Officer.

Thank you and welcome everyone to IMAX with fourth quarter and full year 2021 earnings call joining us from the company are Mr. Jordan, <unk>, President and Chief Executive Officer.

Ms, Jessica and Chief Financial Officer, Mr. Eric Lee Chief IR Officer.

After the company's prepared comments, we have allocated time for questions in a Q&A session.

After the Companys prepared comments, we have allocated time for questions in a Q&A session.

If you have not yet received a copy of today's results release, please email HIMX at mzgroup.us, access the press release on financial portals, or download a copy from IMAX's website at www.imax.com.tw.

If you have not yet received a copy of todays results release. Please E mail <unk> IMAX at MZ Group U S.

Access to the press release on financial portals.

Onload a copy from <unk> website at Www Dot IMAX Dot com tw.

Unless otherwise specified, we will discuss our financials based on non-IFRS measures. You can find the related reconciliation to IFRS on our website.

Unless otherwise specified we will discuss our financials based on non <unk> measures you can find the related reconciliations IRS on our web site.

Before we begin the formal remarks, I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual results.

Before we begin the formal remarks, I would like to remind everyone that some of the statements in this conference call.

Statements regarding expected future financial results and industry growth are for.

We're looking statements involve a number of risks and uncertainties that could cause actual results.

Or events to differ materially from those described in this conference call.

or events to differ materially from those described in this conference call.

These factors include but are not limited to the effect of the COVID-19 pandemic on.

These factors include, but are not limited to, the effect of the COVID-19 pandemic on the company's business, general business and economic condition, and the state of the semiconductor industry, market acceptance, and competitiveness of the driver and non-driver products developed by the company, demand for end-use applications products, reliance on a small group of principal customers,

The Companys business general business and economic conditions.

State of the semiconductor industry.

Market acceptance and competitiveness of the driver and non driver products developed by the company.

And for end use application products reliance on a small group of principal customers.

Yes.

Can you success in technological innovation, our ability to develop and protect our intellectual property.

Continued success in technological innovation. Our ability to develop and protect our intellectual property. Pricing pressures including declines in average selling prices. Changes in customer order patterns. Changes in estimated full year effective tax rate. Shortage in supply of key components.

Rising pressures, including declines in average selling prices changes in customer order patterns changes in estimated full year effective tax rate.

Shortage in supply of key components.

Changes in environmental laws and regulations. Changes in export license regulated by export administration regulations, EAR. Exchange rate fluctuation.

Changes in environmental laws and regulation changes in export license regulated by export administration regulations.

<unk>.

Exchange rate fluctuation.

Regulatory approvals for further investments in our subsidiaries our.

regulatory approvals for further investments in our subsidiaries, our ability to collect accounts receivable and manage inventory and other risks described from time to time in the company's SEC filing, including those risks identified in the section entitled risk factors.

Our ability to collect accounts receivable.

Manage inventory other risks described from time to time in the Companys SEC filings.

Those risks identified in the section entitled Risk factors.

And it's form 20-F for the year ended December 31st, 2020, filed with the SEC as may be amended.

In its form 20-F for the year ended December 31, 2020 filed with the SEC and may be amended.

except for the company's full year of 2020 financials, which were provided in the company's 20-F and filed with the SEC on March 31st, 2021. The financial information included in this conference call is unaudited and consolidated and prepared in accordance with IFRS accounting.

For the company's full year of 2020 financials, which were provided in the Companys 20-F filed with the SEC on March 31, 2021. The financial information included in this conference call is audited and consolidated and prepared in accordance with <unk> accounting.

Such financial information is generated internally.

Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor to which we subject our annual consolidated financial statements and may vary materially from the audited consolidated financial information for the same period.

It has not been subjected to the same review was correct.

Including internal auditing procedures and external audits by an independent auditor to which we subject our annual consolidated financial statements and May vary materially from the audited consolidated financial information for the same period.

The company undertakes no obligation to publicly update or revise any forward-looking statements.

The company undertakes no obligation to publicly update or revise any forward looking statements.

whether as a result of new information, future events, or otherwise.

Whether as a result of new information future events or otherwise.

I will now turn the call over to Mr. Eric Lee. Eric, the floor is yours. Thank you, Mark.

I will now turn the call over to Mr. Eric Lee Eric the floor is yours.

Thank you Mark.

You everybody for joining us.

My name is Eric Lee, and I am the chief IRP officer.

My name is Eric Lee and I am the Chief <unk> Officer.

Joining me are Jordan, <unk>, our CEO and Jason <unk> our CFO .

Joining me are Jordan Wu, our CEO , and Jessica Pan, our CFO .

On today's call I would first review the <unk> consolidated financial performance of the fourth quarter and full year 2021.

On today's call, I would first review the HMAS consolidated financial performance of the fourth quarter and four-year 2021, followed by the first quarter 2022 outlook.

Followed by the first quarter of 2022 outlook.

Jordan will then give an update on the status of our business after which we would take questions.

Jordan will then give an update on the status of our business, after which we will take questions.

Our fourth faulter, revenue, was at the upper end of guidance range.

Our fourth quarter revenue, whereas on the at the upper end of guidance range.

White Coat Margin and EPS both exceeded the guidance issued on November 4th, 2021.

<unk> gross margin and the EPS both exceeded the guidance issue on November 4th 2021.

The fourth quarter revenues, gross margin and EPS all reached new records.

Fourth quarter revenues gross margin and EPS.

Reached new record.

Full year 2021 revenues surpassed $1 5 billion.

Four-year 2021 revenues surpassed $1.5 billion, along with record gross margin and EPS.

Along with record gross margin and EPS.

For the fourth quarter, we recorded a net revenue of.

For the fourth quarter, we recorded a net revenue of $451.9 million, an increase of 7.4% sequentially, and an increase of 63.9% compared to the same period last year.

$451 9 million, an increase of seven 4% sequentially and an increase of 63, 9% compared to the same period last year.

Gross margin was 51, 8% an increase from the already high level of 51, 7% in the third quarter.

The gross margin was 51.8%, an increase from the already high level of 51.7% in the third quarter.

And above our guidance of around 50%.

and above our guidance of around 50 percent.

Non-IFIs profit per diluted ADS was $0.849.

Non <unk> profit per diluted ads was $84 nine.

exceeding the estimates of 78 cents to 83 cents.

Exceeding the estimates of 78.

283.

<unk> profit per diluted ads was 81 five.

ISR's profit per diluted ABS was $0.81, higher than guidance range of $0.74 to $0.79.

Higher than guidance range of $74 five $2 79 five.

Revenue from large district drivers was $125 million in Q4, up 6.3% sequentially and near double year-over-year.

Revenue from large display driver was $125 million in Q4.

Up $6 three sequentially and the near double year over year.

Monitor revenue came in better than expected, up more than 30% sequentially, ahead of our prior guidance of a more than 20% increase due to accelerated orders for high-end monitor from certain end customers.

Monitor revenue came in better than expected.

<unk> more than 30% sequentially.

Half of our prior guidance of more than 20% increase due to assist the rated orders for high end monitor from certain customers.

Notebook sales continued strong cost gross momentum deliver.

Notebook sales continued strong growth momentum, delivering double-digit sequential growth as a result of strong shipment of high-end products to world-leading notebook vendors.

Delivering double digit sequential growth.

The result of strong shipment of high end product toward leading notebook vendors.

As expected.

As expected, the fourth quarter TVIC revenue was down single digit sequentially on the backdrop of a sluggish global TV market.

The fourth quart fourth quarter television revenue was down single digit sequentially.

Backdrop.

Stock sluggish global TV market.

In some cases, where TV customers who borne shipment liability to us and suffered business headwinds under mutual consent.

In some cases.

<unk> TV customers who've bond shipment liability to us and the Salford business headwind.

<unk> mutual content.

We redirected their allocated foundry capacity towards IT displays where demand stays strong.

We redirected their <unk> foundry capacity tober displace current demand stays strong.

He wants to touch.

It was through such efficient operating execution that we were able to achieve sales growth for the large display driver business despite the slow TB market and further reinforce the business relationship with strategic customers.

If it's sufficient operating execution.

We were able to achieve sales growth for the large display driver business. Despite the slow TV market and.

Further reinforce the business relationship with strategic customers.

Large panel driver IEC accounted for 27.7% of total revenues for the quarter.

Large panel driver IC accounted for 27, 7% of total revenues for the quarter comp.

compared to 27.9% in the third quarter of 2021 and 23.3% a year ago.

Compared to 27, 9% in the third quarter of 2021, and 23, 3% a year.

Go.

Small and medium sized display driver so resilient sales with revenue of $276 $6 million.

Small and medium-sized display drivers saw resilient sales with revenue of $276.6 million, up 9.6% sequentially and up more than 50% year-over-year.

Nine, 6% sequentially and up more than 50% year over year.

The automotive segment has repeatedly been the fastest-growing sector among our small and medium-sized display drivers.

The automotive segment has repeatedly been the fastest growing sector, among our small and medium sized display driver of segment with sales up more than 20% sequentially this quarter.

with sales up more than 20% sequentially this quarter.

It's worth highlighting.

It's worth highlighting that the e-paper business, another product in our small and medium-sized driver line-up and one of the decent margins, enjoyed more than 80 percent sequential growth in Q4.

The paper business.

Another product in our small and medium sized driver lineup and one of the decent margin enjoyed more than 80% sequential growth in Q4.

Small and medium sized driver IC segment accounted for 61, 2% of total sales of our quarter.

Small and medium-sized driver IC segment accounted for 61.2% of total sales of our quarter, compared to 59.9% in the previous quarter and 64.5% a year ago.

Compared to 59, 9% in the previous quarter, and 64, 5% a year ago.

In Q4.

In Q4, smartphone, tablet, and automotive driver businesses contributed about

Smartphone tablet and automotive driver businesses contributed about the same.

sales with automotive significantly outgrowing the other two sectors.

Sales with automotive significantly outgrowing the other two segments.

a trend that we believe will continue over the next few years.

Trend that we believe will continue over the next few years.

Yeah.

The fourth quarter smartphone sales reached 91.3 million dollars.

The fourth quarter smartphone sales reached 91.

$3 million.

up double digits sequentially and up more than 30 percent compared to the same period last year due mainly to high achievement to key customers despite the outbreak of COVID-19 variants weighing down the worldwide smartphone market.

Double digit sequentially and up more than 30% compared to the same period last year due mainly to higher shipment to a key customer.

Despite the outbreak of COVID-19 Varian.

Paying down the worldwide smartphone market.

The smartphone segment represented around 20% of our total sales in Q4.

The smartphone segment represented around 20% of our total sales in Q4.

Our supply for smartphone was still limited by the total capacity accessible to us, where we could only support shipment to select 10 customers.

Our supply for smartphone.

Still limited by the total capacity accessible to us.

Where we could only the poor shipment to select end customers.

Amidst a slow tablet market, our tablet revenue reached $85.8 million.

Mmm are slow tablet market or tablet revenue reached $85 8 million.

a decline of single digits sequentially, but up around 30% year over year.

The decline of single digits sequentially, but up around 3% year over year.

The decline was caused by shrinking traditional DD IC shipment acquire TVD I sales.

The decline was caused by shrinking traditional DDIC shipment, while TDDI still

were slightly better than record level in Q3 and represented the eighth consecutive quarter of growth since initial production from the first quarter of 2020.

We're slightly faster than our record level in Q3 and represented the eighth consecutive quarter of growth since the initial production from the first quarter of 2020.

We maintained our leading market share position in the non-IOS tablet market with associated TDDI penetration among leading name brands.

We maintained our leading market share positions in the iOS app tablet market with SSL right as the TDI penetration among leading name brands.

<unk> revenue in the quarter accounted for 19% of <unk>.

Template revenue in the quarter accounted for 19% of total sales.

<unk> sales.

Our first quarter revenue for automotive.

set another record amounting to $89.1 million, up more than 20% sequentially, and up more than 130% year over year.

Set another record amounting to $89 $1 million up more than 20% sequentially and up more than 130% year over year.

Thanks to our strong shipment in high-end DDIC products.

Thanks to our strong shipment in high end IC product.

rising KDDI shipment, as well as market share gains across numerous automotive customers.

Rising TDD shipment.

With market share gains across numerous.

Automotive customers.

<unk> continued to grow in quantity tie.

A panel inside the vehicle continues to grow in quantity, size, and includes more advanced features.

And the in crude more advanced features.

We expect to see sustainable robust growth in our automotive business.

sustainable, robust growth in our automotive industry.

Fourth quarter revenue from our non driver business was $15 3 million.

Fourth quarter revenue from our non-driver business was $50.3 million.

slightly down sequentially and up around 50% year over year.

Slightly down sequentially and up around 50% year over year.

We are pleased to report that our ultra-low power

We are pleased to report that.

Our ultra low power.

AI Image Sensing Total Solution successfully entered into mass production in Q4 last year.

AI image sensing a total solution.

Successfully entered into mass production in Q4 last year for a major tech NIM over a mainstream applications.

for a major tech name over a mainstream application.

We reached the major milestone just one year after we delivered the first samples.

We reached this major milestone just one year after we delivered the first samples, a remarkable achievement and illustration of the robustness of our AI solution.

<unk> achievement and illustration of the robustness of our AI solution.

Cmos image sensor sales were up mid teens.

CMOS image sensor sales were up mid-tenths while ITCOM business decreased by low-tenths sequentially as a result of slow demand in TV and Chromebooks. However, on a year-over-year basis,

E Comm business decreased by low teens sequentially as a result of slow demand in TV and the chromebook. However.

The year over year basis.

<unk> sales were up more than 70% a reflection of our leading position across four K AK TV gaming monitor and low power notebook.

Keycon sales were up more than 70%, a reflection of our leading position across 4K, 8K TV, gaming monitor, and low-power notebooks.

Non-driver products in Q4 accounted for 11.1% of total revenue.

Non driver products in Q4 accounted for 11, 1% of total revenues.

That compared to 12, 2% in the third quarter of 2021, and a 12, 2% a year ago.

as compared to 12.2% in the third quarter of 2021 and 12.2% a year ago.

No.

Now IFRS gross margin for the fourth quarter substantiated at high level of 51.8 percent.

Gross margin for the fourth quarter sustained sustained it at high level of 51, 8%.

a continuation from 51.7% of last quarter and greatly increased from 31.2% of the same period last quarter.

A continuation from 51, 7% of last quarter and the greatly increased from 31, 2% of the same period last year.

The higher gross margin was a reflection of better mix towards high end products area.

The higher gross margin was the reflection of better mix towards high-end products area and a more favorable IC pricing environment, resulting from tight foundry capacity.

More favorable pricing environment, resulting from tight foundry capacity.

<unk> gross margin was also 51, 8% for the quarter.

High FRS gross margin was also 51.8% for the quarter.

Our non <unk> operating expense expenses for the fourth quarter was $48 $5 million.

Our non-IFRS operating expenses for the fourth quarter was $48.5 million, up 9.1% from the previous quarter and up 11.5% from a year ago.

Up nine 1% from the previous quarter and up 11, 5% from a year ago.

The sequential increase was a result of a one time cash bonus.

The sequential increase was the result of a one-time cash bonus at the end of December to further reward employees.

At the end of December to further reward employees.

for the remarkable financial results, why the year-over-year increase was caused mainly by increased salary.

For the remarkable financial results.

The year over year increase was caused mainly by increased salary.

<unk> operating expenses were $50 nine a $56 million.

ISI's operating expenses were $56 million for the first quarter, down 18.2% from the preceding quarter, but up 27.9% from a year ago.

For the first quarter down 18, 2% from the preceding quarter, but up 27, 9% from a year ago.

The difference was mainly due to annual bonus compensation, which we award employees at the end of September each year.

The difference was mainly due to annual bonus compensation, which we award employees at the end of September each year.

Reflecting the higher sales and the better growth margin.

Reflecting the higher sales and better gross margin.

The fourth quarter, now IFRS operating income was $185.5 million, or 41.1% of sales.

First quarter <unk>.

Operating income was $185 $5 million or 41, 1% of sales.

versus 41.2% of sales.

Versus 41, 2% of sales.

In the last quarter.

Again, the Q4 operating income reached a historical high.

Again, the Q4 operating income reached a historical high.

Now <unk>.

Now IFI's cost of tax profit was $148.4 million, or $0.849 per diluted ADF.

After tax profit was $148 4 million or 84 nine cents per diluted ads.

a new record high and an increase from $138.9 million or $0.79.5 per diluted ADF last quarter.

<unk>, new record high and an increase from $138 9 million or 79, five cents per diluted ads last quarter.

Now, let's have a quick review.

Now let's have a quick review on the 2021 4-year financial performance.

On the 2021 four year financial performance.

Revenues totaled $1,547.1 million in 2021.

Revenues totaled.

<unk> thousand $547 $1 million in 2021.

Representing 74, 4% growth over that of 2020.

representing 74.4% growth over that of 2020.

The ongoing efforts of the pandemic coupled with the foundry capacity shortage.

The ongoing efforts of the pandemic, coupled with the foundry capacity shortage creep.

created a challenging operating environment.

Created.

<unk> operating environment yet.

Yet also provide provide.

yet also provided favorable conditions for IC vendors such as ourselves.

Provided favorable conditions for IC vendors such as ourselves.

with overall market demands from outpacing supply.

With overall market demand for all passing supply.

Among our three major product categories.

Small and medium-sized display drivers posted the highest growth of 86.8% in 2021 with sales totaling $963.5 million.

Small and medium sized display drivers posted the highest growth of 86, 8% in 2021 with sales totaling $963 $5 million.

We saw extraordinary business momentum, particularly in tablet and automotive sales in 2021, as the leading non-iOS tablet brands all adopted our tablet TDDI solution.

We saw extra ordinary business momentum.

Particularly in tablet and automotive sales in 2021.

Moving now iOS tablet brands.

That is our tablet cdti solution.

And automotive display continues to evolve at rapid rate in the number, size, and the sophistication.

And automotive displays continues to evolve at a rapid rate in the number size and sophistication.

Automotive sales enjoyed the highest growth among offered online in 2021.

Automotive sales enjoyed the highest growth among all product lines in 2021, up more than 110 percent, while sales for tablet IC, our top sales contributor in 2021, grew 77 percent.

<unk> more than 110% higher sales for typically IC, our top sales contributor in 2021.

Grew 77%.

Smartphone and the paper sales were up more than 85% and 23% respectively in 2021.

Smartphone and e-pay per sales were up more than 85% and 23%, respectively, in 2021.

Revenue for large panel display drivers totaled $397 9 million in 2021.

Revenue for large panel display drivers totaled $397.9 million in 2021.

Representing annual growth of 65, 3%.

representing annual growth of 65.3 percent.

During the pandemic.

During the pandemic, the surge in IT demand boosted our notebook display IT sales significantly, up more than $300 million.

Search in demand both stated both tests are notebook display IC sales significantly.

More than 370%.

squares monitored display cells increased more than 30%.

First monitor display sales increased more than 30%.

TV sales were also up by more than 40%. This slight despite the dip in worldwide TV shipment during the second half of the year.

TV sales were also up by more than 40% despite the dip in worldwide TV shipment during the second half of the year.

Non driver products sales totaled $185 7 million, an increase of 42% from last year.

Non-driver product sales totaled $185.7 million, an increase of 42% from last year.

The increase was mainly from telecom sales.

The increase was mainly from T-com cells. More than double MS growing needs for high frame rate and high resolution displays.

More than double emmis growing need for high frame rate and the high resolution displays.

Cmos image sensor business.

severe, kept by capacity constraints throughout the year, was up mid-single digit from the strong demand in notebook and web camera for work from home and online education.

Year capped by capacity constraints throughout the year.

Was up mid single digit from the strong demand in notebook and the west camera for home and online education.

This annual sales increase was offset by W. L wafer level optics.

This annual sales increase was offset by WLO, wafer-level optics, as the legacy product of a major customer gradually decreased.

Legacy product of our major customers gradually decrease.

<unk> gross margin in 2021 was 48, 5%.

Now IFI scores margin in 2021 was 48.5%.

greatly increased from 24.9 percent in 20

Greatly increased from 24, 9% in 2020.

The increase was mainly a refraction of more favorable pricing and product mix, resulting from the type.

The increase was mainly a refraction of more favorable IT pricing and the product mix resulting from the tight funding.

Foundry capacity.

As well as increasing contribution from high margin product lines.

as well as increasing contribution from high-margin product lines, especially in automotive, notebook drivers, and teacups.

Specialty in automotive notebook drivers and T com.

Non <unk> operating expenses were $171 $5 million up.

Now IFRS operating expenses were $171.5 million dollars.

$15.2 million or 9.7% due to higher salary expenses.

$15 $2 million or nine 7% due to higher salary expenses.

and a cash bonus we awarded our employees at the end.

And our cash bonus.

Awarded our employees at the end of December .

Despite the NT dollar appreciation against the U S dollar during 2021.

despite the anti-dollar appreciation against the U.S. dollar during 2021.

the currency such as Asian to Himex.

The currency suffered fracture patients to high Max.

were of limited impact as our accounting was U.S. dollar-denominated, the same as the bulk of our buying and selling.

Our of limited impact as we accounting.

Our accounting while U S dollar.

Denominated.

The bulk of our buying and the selling activities.

Thereby creating a new nature H.

thereby creating a new natural hate.

The stronger NT dollar in 2021.

The stronger NT dollar in 2021 did contribute to around $4.6 million of operating expenses increase as we paid the salary of the Taiwan-based employees and much of the Taiwan local incurred expenses in NT dollar.

Contribute to a wrong.

For $6 million of operating expenses increase.

Increase.

We paid the salary of the Taiwan based employees and much of the Taiwan local incur these expenses in R&D dollars.

Yet the non-IFRS operating expenses ratio of 2021 was reduced to 11.1% from 17.6% in 2020.

Yet.

<unk> operating expenses ratio of 2021 was reduced to 11, 1% from 17, 6% in 2020.

indicating our consistent and prudent management of operating expenses.

Indicating our consistent and prudent management of operating expenses.

IFIS operating expenses were $203.6 million, up $40.7 million, or 25%, compared to last

<unk> operating expenses were 200, and the $3 6 million up $47 million or 25% compared to last year.

The increase came mainly from VAT paid a portion of the annual bonus compensation.

The increase came mainly from a vast portion of the annual bonus compensation we award employees at the end of September each year.

Boarded we reward employees at the end of September this year.

Reflecting higher sales and better gross margin.

Reflecting Higher Stealth in the Panther Ghost Module.

No.

Non-IFRS operating income was $578.3 million, or 37.4% of sales.

Operating income was $578 3 million or.

337, 4% of sales.

an increase of $513.7 million from $64.6 million in 2020.

An increase of $513 7 million from $64 six meaning.

In 2020.

For the same reason.

but partially offset by increase of annual bonus compensation.

But partially offset by increase of annual bonus compensation.

<unk> operating income was $545 million.

IFRS operating income was $545 million.

contrast to $57.9 million in 2020.

In contrast to $57 9 million in 2020.

Our non <unk> net profit for 2021 was $463 6 million.

Our non-IFIs net profit for 2021 was $463.6 million or $265.1 cents per diluted ADF.

200 265.1.

Fully diluted.

Up $411 2 million from $52 3 million or 30.

up 411.2 million dollars from 52.3 million dollars or 30

0.2 cents per diluted ADF in 2020.

Two cents per diluted ads in 2020.

<unk> net profit.

IFI net profit for the year was $436.9 million or $249.8, up $389.8 million from $47.1 million or $27.2 per diluted ADF in 2020.

For the year was $436 $9 million or 249 eight.

<unk> up $389 8 million from $47 $1 million or 27.2 cents per diluted ads.

In 2020.

The upswing in income was a result of better sales, higher growth margin, along with well-managed operating expenses.

The upswing in income.

As a result of phase or better sales higher gross margin along with well managed operating expenses.

Turning to the balance sheet we.

We had $364.4 million of cash, cash equivalents, and other financial assets as of December 31, 2021, compared to $201.4 million at the same time last year and $250.8 million a quarter ago.

We had $364 $4 million of cash cash equivalents and other financial assets.

As of December 31, 2021.

Compared to 200, and the one $4 million at the same time last year and the $258 million quarter.

A quarter ago.

The higher cash balance was mainly from $182.2 million of operating cash inflow during the quarter.

The higher cash balance was mainly from $182 2 million of operating cash inflow during the quarter.

And the payment received from customers for the purpose of securing their long term chip supply.

and payment received from customers for the purpose of securing their long-term chip supply.

Partially offset by payment we made in order to secure our long term foundry capacities.

partially offset by payment we made in order to secure our long-term foundry capacity.

Restricted cash was $154 $1 million at the end of Q4 compared to $156 $8 million, a quarter ago, and 100, and a $4 million a year ago.

Restricted cash was $154.1 million at the end of Q4 compared to $156.8 million a quarter ago and $104 million a year ago.

The restricted cash was mainly used to guarantee the short-term secure borrowings for the same amount.

The restricted cash was mainly used to guarantee the short term secured borrowings for the same amount.

We had $52 $5 million of long term unsecured loans.

We had $52.5 million of long-term unsecured loans at the end of Q4, of which $6 million was the current portion.

End of Q4 of which $6 million.

Current portion.

Our year end in that inventory.

Our year-end inventory were $198.6 million, up from $160.9 million last quarter, and up from $108.7 million a year ago.

$198 $6 million upfront of $169 million.

Last quarter in Hungary, and the $8 $7 million a year ago.

Amid tight foundry foundry capacity.

<unk> demand steel I'll pass that supply we continue to pursue.

where demand still outpaces supply. We continue to pursue an aggressive inventory build-out challenge.

This is interim inventory build are challenging.

the mass majority of our inventory position now is compromised.

The mass majority of our inventory position now is compromised.

comprised of working process goods, while finished goods are promptly shipped as soon as they are available.

I'm sorry comprised of working.

Processed goods finished goods.

Because of the shift.

They are available.

Accounts receivable at the end of December 2021 was $410 $2 million.

Accounts receivable at the end of December 2021 was 410.2 million dollars.

slightly up from $400.9 million last quarter and up from $243.6 million a year ago due to higher sales.

Slightly up from 400.

$9 million last quarter, and up from $243 $6 million a year ago due to higher sales.

DSO was 97 days at quarter end.

DSO was 97 days at the quarter end as compared to 100 days both a year ago and from last quarter.

<unk> to 100 days, both a year ago and the front last quarter.

Fourth quarter capital, we expect expenditure were $2 million.

Fourth quarter capital expenditure was $2 million.

versus $1.21 million last quarter and $0.8 million a year ago.

That's one $2 1 million last quarter, and zero point $8 million a year ago.

The fourth quarter CAPAX was mainly for R&D-related equipment and in-house testers of our IC design.

The fourth quarter Capex was mainly for R&D related equipment and the in house testers.

Our IC design business.

Total capital expenditure for the year was 476 million.

Total capital expenditure for the year was $7.6 million.

Mainly for designed towards R&D related equipment as well in house chapter of our IC design business.

Many for design tools, R&D-related equipment, as well as in-house capture of our IT design.

as compared to $5.8 million in 2020. As of December 31st...

As compared to five 8 million in 2000.

As of December 31, 2021.

<unk> had $174 3 million ABS all sandy.

IMAPS had 174.3, meaning ABS outstanding, unchanged from last quarter.

Unchanged from last quarter.

On a fully diluted basis.

On a fully diluted basis, the total number of ADS outstanding for the fourth quarter was 174.8 million.

The total number of ads outstanding.

The fourth quarter was $174 8 million.

Now turning to our first quarter.

Now turning to our first quarter 2022 guidance.

2022 guidance.

Coming off of the record revenue results for Q4 2021.

Coming off of the record revenue result from Q4 2021, we expect first quarter revenue to decline 5% to 9% sequentially.

We expect first quarter revenue to decline, 5% to 9% sequentially.

Better than off season sales, we typically experience during the lunar new year season with fewer working days.

The guidance range implies year over year increase of 33% to 39% in revenues.

The Guided Range implies a year-over-year increase of 33% to 39% in revenue.

Now IFR growth margin is expected to be around 46% to 48%, depending on the final product mix.

No.

Gross margin is expected to be around 46% to 48% depending on the final product mix.

Now <unk> profit.

Retrieval to shareholders is expected to be in the range of $0.67 to $0.73 per fully diluted ADS.

Attributable to shareholders.

<unk> to be in the range of 67 to 73.

Per fully diluted ads.

Down, 21% to 14% sequentially, but up 74% to 90% year over year.

down 21% to 14% sequentially, but up 74% to 90% year over year.

<unk> profit attributable to shareholders is estimated to be in the range of 63.5 to 69 five.

IFRS profit attributable to shareholders is estimated to be in the range of 63.5 to 69.5 cents per fully.

Per fully diluted ads.

I would now like to turn the call over to Jordan Jordan the floor is yours.

I would now like to turn the call over to Jordan. Jordan, the floor is yours.

Okay.

Thank you Eric.

I'll speculate or spectacular results in 2021 or achieved thanks to macro level of tailwind all efforts to secure solid capacity.

Our spectacular results in 2021 were achieved thanks to macro-level tailwinds, our efforts to secure solid capacity, and a steadfast focus on optimizing product mix and solidifying strategic customer relationships.

Steadfast focus on optimizing product mix and solidified strategic customer relationships.

All of these factors contributed to the record sales and profit margins.

All of these factors contributed to the record sales and profit margins.

Now as we look ahead into 2022, against the backdrop of the industry-wide foundry capacity shortage, which is expected to expand well into 2022.

As we look ahead into 2022.

The backdrop of the industry wide foundry capacity shortage, which is expected to extend well into 2022.

The visibility into certain areas of consumer electronics is rather limited with global consumption potentially impacted by the ongoing COVID-19 pandemic.

the visibility into certain areas of consumer electronics is rather limited.

with global consumption potentially impacted by the ongoing COVID-19 pandemic.

Port congestion.

poor concession, worldwide inflationary pressure, and worries over geographical conflict.

Hawaii inflationary pressure and worries over geographical conflict.

However, we are upbeat about a year head growth prospect.

However, we are a bit above our year-ahead growth prospect, backed by a few product areas, notably the automotive and ultra-low-power AI image sensors.

Biofuel product areas, notably the automotive and ultra low power AI image sensing businesses.

which we feel confident will stay strong regardless of the macroeconomic concerns.

We feel confident will stay strong regardless of the macro economic concerns.

We anticipate these two product areas.

We anticipate these two product areas, both with good gross margins, will outgrow other product lines in 2022.

Both with good gross margins.

Outgrow other product lines in 2032.

Robust demand.

Robust demands for our traditional automotive driver IC is backed by strong factory capacity support, while automotive TDDI is on track to experience exponential growth throughout 2022 and beyond.

For our traditional automotive driver IC expect by strong foundry capacity support.

Automotive TVT is on track to experience Eastern Asia growth throughout 2022 and beyond.

We expect to reach 10 million units cumulative shipments in automotive TDDI in as soon as the second quarter of this year.

We expect to reach 10 million units cumulative shipments in automotive TVT.

As soon as the second quarter of this year.

Yes.

In the first quarter of 2022, our automotive product sales

In the first quarter of 2022 automotive product sales.

including traditional driver IC, TDDI, TCON, and OLED driver are expected to represent more than 25% of our total sales.

Including traditional driver IC, <unk> and OLED driver IC.

<unk> to represent more than 75% of our total sales.

As the contribution of automotive revenue grows, you are better positioned as a long-term product.

As a contribution of automotive revenue grows.

We're better positioned our long term product mix in terms of both probably margin of business visibility.

in terms of both profit margin and business feasibility.

Meanwhile, we are highly encouraged by the early success, we have seen with <unk>.

Meanwhile, we are highly encouraged by the early success we have seen with ultra-low-power AI image sensing business thus far after a leading customer adopted it for mainstream applications.

Also low power AI image sensor business, thus saw loss.

Far after leading customer adopted for a mainstream application.

We expect to see more design wins awarded across a broad customer base and a high variety of applications leading to robust sales growth for this new high-margin product line.

We expect to see more design wins awarded across.

Broad customer base and high variety of applications, leading to robust sales growth for this new high margin product lines.

No let me quickly address.

Now, let me quickly address the ongoing boundary capacity shortage.

<unk> foundry capacity shortage.

We expect the supply demand imbalance to continue throughout 2022, especially on the mature nodes now we are primarily anchored to.

We expect the supply-demand balance to continue throughout 2022, especially on the material nodes that we are primarily anchored to.

HIMAX has been proactive in this regard, continuing to pursue new partnerships and agreements to increase our available capacity and achieve our 2022 business goals.

<unk> has been proactive in this regard continuing to pursue new partnerships and agreements to increase our available capacity and achieve our 2022 business goals.

In the meantime, we entered contractual agreements with the vast majority of panel makers, and in some instances, select leading-end customers who are prepared or make a deposit to secure their long-term chip supply, which in turn also improves our business feasibility.

In the meantime, we entered.

Contractual agreements with the vast majority of panel makers and.

In some instances slipped leading end customers, who are they prepay or make a deposit to secure their long term chief supply, which in turn also improves our business visibility.

While pricing has stabilized recently on both the foundry and customer size, we guided for a modest sequential decline in gross margin for the first quarter due to a couple of factors.

While pricing has stabilized recently on both the foundry and customer sides, we guided for a modest sequential decline in gross margin for the first quarter due to a couple of factors.

First, our cost of goods sold this quarter represents pricing from the previous quarter when foundries were still raising their prices.

First our cost of goods sold this quarter represents pricing from the previous quarter Quint foundries, we're still raising their prices.

Second in the fourth quarter, we benefited from.

Second, in the fourth quarter, we benefited from expedited orders from customers who paid a premium, and we have since seen a decrease in such orders during the first quarter.

Expedited orders from customers, who pay the premium and we have since seen a decrease in such orders during the first quarter.

On a year-over-year basis, however, our first quarter margin will still be substantially higher.

On a year over year basis, However, our first quarter margin was substantially higher.

Sure.

Looking ahead into 2022 backed by more secure foundry capacity the last year.

Looking ahead into 2022, backed by more secure foundry capacity than last year and an advanced product portfolio, we are well-positioned to continue to grow our top line and will continue to work towards maintaining a high gross margin, one of our major long-term business goals.

And diverse product portfolio, we are well positioned to continue to continue to grow our topline and we will continue to work towards maintaining a high gross margin all of our major long term business goals.

We are in.

wherein we anticipate further revenue and profit growth in 2022.

Dissipates further revenue and profit growth in 2022.

With that, now let us start with an update on the large panel dry rising.

We said no that I'll start with an update on the large panel driver IC business.

Historically, the first quarter has seasonally seasonal Italy being the slowest of the year due to the lunar new year holidays.

Historically, the first quarter has seasonably been the slowest of the year due to the Lunar New Year holidays.

In addition, we are seeing softness in certain market segments and intensified China local competition.

In addition, we are seeing softness in certain market segments.

Intensified China local competition.

Nevertheless, HIMEX is armed with a diversified and comprehensive product offering covering TV, monitor and notebook, which provides us with the flexibility to take actions in tandem with our customers and suppliers to direct production towards the sectors with stronger demand.

Nevertheless.

It is armed with a diversified and comprehensive product offering covering TV monitor notebook.

Which provides us with the flexibility to take actions in tandem with our customers and suppliers to direct production towards the sectors with stronger demand.

For the first quarter, large disproportionalized revenue is projected to be flat to slightly down sequentially, but this will represent an increase of around 70% year-over-year.

For the first quarter large display driver IC revenue is projected to be flat to slightly down sequentially, but this will represent an increase of around 770% year over year.

Despite the low season, TV IC sales I expect to be around flat sequentially in the first quarter anchored by high end and large sized TV shipments.

Despite the low season, TVIC sales are expected to be around flat sequentially in the first quarter, anchored by high-end and large-size TVIC shipments to key accounts.

Shipments to key accounts.

Conversely, we expect both monitor and notebook IC sales to drop from last quarter due mainly to panel customers' inventory adjustments.

Conversely, we expect both monitor and notebook IC sales to drop from last quarter due mainly to panel customers' inventory adjustments in response to the slowing sales momentum after consecutive strong quarterly increases.

in response to the slowing sales momentum after consecutive strong quarterly increases.

We will see the continuation of the prevailing foundry shortage and the demand for advanced displays to remain strong.

foreseeing the continuation of the prevailing foundry shortage and the demand for advanced displays to remain strong.

We continue to move towards higher-end markets while providing advanced driver ICs and T-carriers.

We continue to move towards higher end markets oil provided avast driver Ics T cons for a one stop shopping experience focusing on higher end displays and premium models quarter respective leading end customers in TV monitor and notebook markets.

for a one-stop shopping experience, focusing on higher-end displays and premium models for the respective leading-end customers in TV, monitor and notebook markets.

We also support them for the future upgrades for customers next generation products.

We are also supporting further future upgrades for customers' next-generation products.

including high-speed interface, low power consumption, higher refresh rate, ultra-large size, high aspect ratio, and curved view design.

Including high speed interface.

Power consumption higher refresh rates.

For the large sized high aspect ratio in curved design.

All this will help boost our profit margins and represented a high barrier of entry that differentiates us that differentiates us from China level competition.

All this will help boost our profit margins and represent a high barrier of entry that differentiates us from China's local competition.

Sure.

We remain positive on our last display driver IC business for 2032.

We remain positive on our large display driver IC business for 2022.

Now, let's turn to the small and medium sized display driver IC business.

Now, let's turn to the small and medium-sized display drive ICP.

In the first quarter, revenue is expected to slightly decline by mid-single-digit sequentially by increase around 30% year-over-year.

In the first quarter revenue is expected to.

Slightly declined by.

Mid single digit sequentially by inquiries around 30% year over year.

Sales for automotive drivers again.

Sales for automotive drivers again are poised to post another quarter of strong growth, up over 30% sequentially, while type-A sales are expected to be down mid-single-digit and smartphone I.C.E. business to decline double-digit sequentially.

<unk> to post another quarter of strong growth of over 30% sequentially.

Wild type of sales are expected to be down mid single digits as smartphone IC business to decline double digit sequentially.

Yes.

Now, let's review these three major product segments within the small and medium-sized display drive IC business. First...

No. This review these three major product segments within the small and medium sized display driver IC business.

First automotive sector.

Order backlog and secured multiyear foundry capacity provide good long term visibility the visibility for higher mix in the automotive driver IC business.

All the backlog and secured MATA-EF100 capacity provide good long-term visibility for HIMAX in the automotive driver IC business, where we have a leading global market share of 40%.

We have leading global market share of 40%.

backed by strong design wing coverage with all major panel houses and numerous car makers alongside an enlarged capacity.

Thanks, Bye shown design win coverage with all major panel houses and numerous carmakers alongside in lost capacity.

We expect the automotive sector to be our number one sales contributor starting 2022.

We expect the automotive sector to be our number one sales contributor starting 2022.

We are now targeting to couple of our automotive sales again in 2022.

We are now targeting to double our automotive sales again in 2022 on top of the already strong 2021 sales which went up more than 110% from the year before.

On top of the already strong 2021 sales.

And up more than 100, 110% from the year before.

For the first quarter automotive driver IC sales are expected to grow over 30% sequentially and increase of more than 170% year over year.

For the first quarter, our automotive drive IT sales are expected to grow over 30% sequentially, an increase of more than 170% year-over-year.

More specifically.

More specifically, we expect the Q1 automotive DDIC sales still much larger than those of TDDI and AMOLED to grow over 20% sequentially.

We expect the Q1 automotive <unk> sales still much larger than those of <unk>.

To grow over 20% sequentially.

on its own, accounting for more than 20% of our total sales.

Only on the accounting for more than 20% of our total sales.

Now, withstanding the decent growth, we are still suffering from a severe foundry capacity shortage for automotive TDIs.

Notwithstanding the decent growth, we are still suffering from a severe foundry capacity shortage for automotive DD IC.

which is the area with the most severe shortage for us right now.

Is the area with the most severe shortage for us right now.

Yes.

The automotive TDI.

The automotive TDDI, where we are much better prepared in terms of foundry capacity, is set to outgrow DDI-C.

We are much better positioned much better prepared in terms of foundry capacity.

You said to outgrow DD IC going forward.

Currently we are leading the market with hundreds of design win activity on projects across the board with all leading panel makers tier ones and automotive Oems with just a small portion of them already in mass production.

Currently, we are leading the market with hundreds of design-wind TDI projects across the board with world-leading panel makers, tier 1s, and automotive OEMs, with just a small portion of them already in mass production.

We announced earlier that our Gen2 Automotive DDDi, which we started ramping as recent as Q3 last year,

We announced earlier that our churn to automotive DVD.

Which we started ramping.

Recent as Q3 last year.

achieved 1 million units during the first quarter of shipment alone.

Shift 1 million units.

During the first quarter of shipments alone.

The Gen. Two automotive activity has become the mainstream product shortly after introduction to the market.

The Gen 2 Automotive TD-DI has become the mainstream product shortly after introduction to the market.

and already terminate our shipments right now.

Already dominates our ship shipments right now.

Our automotive Tds shipment reached.

Our automotive TDDI shipment reached around 1.4 million units in the fourth quarter last year and we expect to ship considerably over 3 million units in Q1 this year.

One 4 million units in the fourth quarter last year.

We expect to ship considerably over 3 million units in Q1 this year.

Automotive TDDI brings us not only much higher content value on a per-panel basis,

Automotive TDI Queens us not only much higher contract value on a per panel basis by it's also harder to compete.

but it's also harder to compete in for late-comers.

We compete in for Les Commerce.

Automotive TDDI, still a relatively new technology, has become a major growth engine for us with the accelerating momentum expected to carry over throughout 2022 and the years ahead.

Automotive to Adi.

Still a relatively new technology has become a major growth engine for us.

The accelerating momentum we expect it to carryover throughout 2022 and the years ahead.

Looking at the automotive display industry trends.

The power market continues to embrace sophisticated display technologies and caters to interactive, stylish and curved designs with ever-improving display resolution and image quality.

The car market continues to embrace sophisticated display technologies and caters to interactive stylish and curved designs with ever improving display resolution image quality.

There is also a shift towards more and larger size displays per vehicle than ever before.

There is also a shift towards more and larger size displays per vehicle than ever before, all indicating much more driver-oriented demand.

All indicating much more driver IC demands.

<unk> is the market leader in automotive display driver business covering the entire spectrum of products and technologies Inc.

Hymex is the market leader in automotive display driver business, covering the entire spectrum of products and technologies.

Including.

The industry's most comprehensive traditional TD IC product offerings.

the industry's most comprehensive traditional DDIC product offering.

as well as leading solutions for new technology areas such as TDDi, NovoDemian T-COM, LTDI, and OLED.

<unk>, leading solutions for new technology areas, such as TDI, the ultimate T com.

The OTI.

OLED <unk>.

For automotive Cdti's technology that is essential for large sized stylish and curved automotive displays.

For automotive TDI, a technology that is essential for large size, stylish, and curved automotive displays.

We pioneered the mass production of the new technology back in 2019.

We pioneered the mass production of the new technology back in 2019.

and have shipped cumulatively millions of units since.

Heft shipped cumulatively millions of units since.

We continue to dominate new project design wins with direct and indirect customers across the continent.

We continue to dominate our new project design wins with direct and indirect customers across the continent.

For larger loans, so the inches slim and curved automotive displays.

for larger than 30 inches, slim and curved automotive displays.

We again led the industry by introducing cutting-edge LTDI technology that strives for seamless incorporation of sophisticated touch features with multi-chip design architecture.

We again led the industry by <unk>.

Producing cutting edge LCD technology.

For seamless incorporation of sophisticated contributions with smaller chip design architecture.

We are encouraged by the progress made in recent quarters have increased design win coverage across panel makers and engaged more tier ones and Oems for them to incorporate <unk> into their new vehicle models.

We are encouraged by the progress made in recent quarters, having increased design wind coverage across panel makers and engaged more tier 1s and OEMs for them to incorporate our LTDI into their new vehicle models.

Some of them are slated for mass production starting in the first half of 2023.

Some of them are slated for mass production starting in the first quarter. The first half of 2000 and for the Street.

With the commencement of TDI must production and OTT thereafter.

with the commencement of TDDI mass production and LTDI thereafter.

We are confident that our overall market share in the automotive display driver market will continue to rise.

We're confident that overall.

Market share in automotive display driver market we.

We will continue to rise in the coming years.

Okay.

Next, on smartphone and tablet business.

On smartphone and tablet businesses.

We expect Q1's smartphone IT business to decline double-digit sequentially.

We expect Q1 <unk>.

<unk> business declined double digits sequentially.

challenged by slowing sales in the global smartphone market, inventory held in stock by smartphone makers, and last but not least, longer production cycle of a new product, a factor which is specific to Himex, but only during this quarter.

Challenged by slowing sales in the global smartphone market inventory held in stock by.

Smartphone makers and last but not least longer production cycle of new product.

<unk>, which is specific to high mix bony during this quarter.

In Q1.

In Q1, amidst the worldwide smartphone slowdown, we strategically initiated a product transition plan for key customers' next-generation new designs that support higher frame rate, ultra-thin bezel, and higher-resolution vision.

Missed the worldwide smartphone slowdown, we strategically initiated a product transition plan for key customers next generation new designs.

Port.

Wilfred and rate Usher is the peso and high resolution fishes.

The new generation products.

The new generation products is designed with more masking layers, and therefore requires longer production time, which, during the first quarter of production, will lead to less output.

The site with small masking layers, and therefore requires local production tons, which during the first quarter of production will lead to less output.

The product output is expected to be back to normal starting from the second quarter.

the product's output is expected to be back to normal starting from the second quarter.

Our tablet sales are expected to decline mid single.

Our tablet sales are expected to decline mid-single digit in Q1 due to worldwide tablet market adjustment from a high level.

Single digit in Q1 due to worldwide tablet market adjustment from a high level.

However, our <unk> sales in.

However, our TDDI sales, akin to seasonality, are expected to be up low single digits sequentially in the first quarter, benefited by the proactive adoption by all leading non-iOS tablets names of our TDDI solutions.

In the seasonality.

<unk> to be up.

Low single digits sequentially in the first quarter.

By the proactive adoption by all leading non iOS tablet themes of our TDI solutions.

We continue to see an acceleration in TD-DIP illustration for tablets following surgery needs for larger size displays, higher frame rate, and active stylus features.

We continue to see an acceleration in <unk> penetration for tablets following surgery needs for larger size displays higher frame rate and active stylus features.

as the dominating tablet driverless supplier for literally all non-iOS tablet vendors.

Is the dominating tablet driver IC supplier for literally all new iOS tablet visitors.

Our TDDi solutions continue to gain traction and are adopted broadly in customers' next-generation tablet products.

Our <unk> solutions continue to gain traction and.

Adopted broadly in customers' next generation tablet products.

Among all, we are seeing fast-expanding education tablets, where our tablet TDDi with Active Status feature has been widely adopted by several leading Chinese players.

Or we have seen first expanded education tablet.

<unk> with active Stylus Fisher has been widely adopted by several leading Chinese players.

Turning to the E pay per driver business than other products in our small and medium sized driver.

Turning to the e-paper driver business, another product in our small and medium-sized driver lineup.

Up.

Our E tail business, which currently only represent a small portion of total sales is set to grow by more than 100% sequentially and more than 240% year over year in Q1.

Our e-paper business, which currently only represents a small portion of total sales, is set to grow by more than 100% sequentially and more than 240% year-over-year in Q1.

Driven by the early ramp up of projects with leading customers.

driven by the early ramp-up of projects with leading customers and backed by long-term supply agreements.

By long term supply agreements.

We are collaborating with world-leading e-paper customers for certain ASIC projects.

We are collaborating with world, leading enable customers for certain <unk> projects.

On their next generation products.

This consolidates our market presence in the emerging e-reading and e-signage segments from 2022 and onward.

This consolidates our market presence in the emerging E reading and refinish sequence from 2022 and onward.

Next for an update on air molded.

HIMAX continues to gear up for the air-modeled driveway's development in partnership with major Chinese and Korean panel makers.

<unk> continues to queue up for the AMOLED driver IC development in partnership with major Chinese and Korean panel makers.

In Q1, our flexible AMOLED driver and T com for automotive application successfully ramped up for our customers.

In Q1, our flexible air-modeled drivers and T-con for automotive applications successfully ramped up for customers' flagship EV models.

Flagships EV model.

The number of awarded projects for automotive OLED Ics is growing at least for the EMR vendors.

The number of awarded projects for our automotive OLED ICs is growing with further EVMAR vendors.

In addition, our outlet for tablets is expected to commence mass production in the second quarter of this year, which Chinese panel members

In addition, our OLED <unk> for tablet is expected to commence mass production in the second quarter of this year with Chinese panel makers.

As for smartphone, we continue to commit R&D resources to AIRMODEL DRIVER IC through engagement with top-tier customers.

As for smartphone, we continue to commit R&D resources to AMOLED driver IC through engagement with top tier customers.

You view of serious concerns all OLED display driver capacity in the next few years, we have also secured meaningful capacity for smartphone OLED drivers.

In view of serious constraints on OLED display driver capacity in the next few years, we have also secured meaningful capacity for smartphone OLED drivers.

Now let me share some of the progress we made on the non-drive IC businesses.

Now, let me share some of the progress we've made on the.

The non driver IC businesses.

Let's start from the timing controller.

We anticipate Q1 T-con sales to decrease single-digit sequentially as a result of weaker demand in TV and Chromebook novel sectors.

We anticipate Q1 comp sales to decrease single digits sequentially as a result of weaker demand in TV and chromebook.

Those sectors.

However, on a year over year basis, pecan sales will be up around 50%.

However, on a year-over-year basis, teacup sales will be up around 50%.

We are optimistic about the long-term growth prospect of the T-Con business, where we have successfully positioned ourselves for higher-end and higher-value-added areas, including 4K slash 8K TV, gaming monitor, and low-power notebook, in view of the consumers' pursuance of various new types of entertainment for film, television, and gaming.

We are optimistic about that.

Long term growth prospects of the <unk> business, where we have successfully positioned ourselves for higher end and higher value added areas, including <unk> Slash AK TV gaming monitor and low power notebook in view of the consumers pursuance of various new types of entertainment.

For film telling.

TV and gaming.

Additionally, we extended our telecom product reach into automotive and gaming TV markets.

Additionally, we extend our T-Con product reach into automotive and gaming TV market.

Our cutting-edge automotive local team in Tecan has won numerous awards and penetrated into OEMs and Tier 1 car makers' new premium models.

Our cutting edge automotive logo demean Tikkun has won numerous awards and.

Penetrated into Oems and tier one comment because new premium models with some of them slated for mass production starting in the second quarter of 2032.

with some of them slated for mass production starting the second quarter of 2022.

In the <unk> TV market, we also leading the industry by introducing the world's first 280 acres AK TVT come in collaboration with major TV panel makers.

In the gaming TV market, we are also leading the industry by introducing the world's first 288Hz AKTV T-con in collaboration with major TV panel makers.

We believe the Qigong segment will be one of the driving forces for our non-driver business.

We believe the chicken segment will be one of the trading forces for our non driver business.

Moving forward.

Now switching gears to the Ultra-Low-Power AI Image Sensing Turbo Solution, which incorporates HIMAX Ultra-Low-Power CMOS Image Sensor, our proprietary AI processor, and CNN-based AI algorithm.

Now switching gears to the ultra low power AI image sensing solution, which incorporates carmax.

Ausiello policy most image sensor.

<unk> AI processor and CNN based algorithm.

As reported earlier, the sizeable order for a top-tier NAMP customer's mainstream application successfully entered mass production in Q4 last year.

As reported earlier, the sizable order for a top tier them customers menstrual amputation.

Successfully enter mass production in Q4 last year.

marking another impressive milestone for our new AI business within just one year since our initial release.

Marking another impressive milestone.

For our new AI business within just one year since our initial release.

We will give further details after the end customers' official announcement.

We will give further details after the end customer's official announcement.

We have also made good progress on this menstrual application with other leading vendors where the number of design in projects is increasing as we speak.

We have also made good progress on this mainstream application with other leading vendors where the number of design projects is increasing as we speak. In addition to the

In addition to the success story I just mentioned.

The second application we expect to see significant volume is in automatic meter reading, or AMR.

The second application, we expect to see significant volume is in.

Domestic.

Mr retail.

Okay.

where our AI solar solution has been widely adopted by numerous customers across a wide geographical area in China.

Our <unk> solution has been widely adopted by numerous customers across a variety of.

Geographical area in China.

of power-saving AI cameras deployed over the existing installed base of traditional water meters.

Our policy with AI cameras deployed over the existing installed base of traditional water meters.

enable the water meter to automatically collect consumption data with AI operating locally on the edge.

<unk> enabled the water meter to automatically collect consumption data with AI operating locally on the edge.

The device transmits only by sized middle data to the silver fulfilling a intel detection.

The device transmits only bite-sized metadata to the server for billing and in-time detection of normal consumption or leakage, eliminating the need

No more consumption or leakage.

Eliminating the need for mainly already.

The battery pack has a lifetime of over five years.

The battery pack has a lifetime of over five years, greatly outperforming conventional AMR solutions, which usually are in a bulky form with large battery packs and without local AI capability, have to transmit massive image data to the cloud to perform either.

Outperforming commercial.

Solutions, which usually are bulky form.

Battery packs and with our local AI capability.

Smit massive image data to the cloud to performing regions.

We are already seeing accelerated deployment of our AI solutions to a wide range of applications, including notebook whole appliances utility meter automotive battery powered surveillance camera.

We are already seeing accelerated deployment of our AI solutions to a wide range of applications, including notebook, home appliances, utility meter, automotive, battery-powered surveillance camera, panoramic video conferencing, and medical, among other things.

Panoramic videoconferencing and medical among other things.

Moreover.

New design sockets are on the way as we look to leverage the collaboration with leading cloud service partners, such as Microsoft Azure and Google TensorFlow, on their Edge to Cloud platform to drive further adoption on applications such as smart home, smart office, healthcare, agriculture, retail, and factory automation.

New design sockets.

As we look to leverage the collaboration with leading closer with partners such as Microsoft Azure.

<unk> is a flow.

Only our edge to cloud platform to drive further adoption of applications, such as Smart home Smart office health care, agriculture, retail and factory automation.

Last but not least, we are seeing numerous design-in activities of our AI solutions for endoscope.

Last but not least we have seen numerous design in activities.

Our AI solutions for endoscope.

an area we are extremely excited about that may represent an extraordinary game-changer for the health examination industry. We will report

An area we are extremely excited about.

<unk> may represent an extraordinary game changer for the hills examination industry.

We will report more details in due course.

We are very encouraged by the traction these relatively new product line has generated.

We are very encouraged by the traction this relatively new product line has generated.

in a short amount of time and expect to see increasing sales contributions throughout 2022 and beyond.

In a short amount of time.

To see increasing sales contribution through 2022.

Yes.

Lastly.

given the recent surge of interest in the metaverse and immersive technology.

Given the recent surge of interest in the metal versus immersive technologies.

I'd like to give an update on our optical-related product lines to which we have committed years of R&D efforts.

Like to give an update on our optical related product lines to which we have committed years of R&D efforts.

Our <unk> <unk> and <unk> sensing.

our air course, WLO, and 3D sensing. Three separate.

Three separate optical related technologies, mainly individually or combined <unk>.

may individually or combined play a key role in enabling metaverse devices.

A key role in enabling <unk> devices.

To help users transit and connect seamlessly between slash VR devices and realize.

to help users transit and connect seamlessly between AR slash VR devices and realize the right display.

The right display and <unk> technologies are vital.

The losses.

AR glasses consider one of the ideal displays for metaverse application.

One of the ideas displaced for metal versus applications.

feature vision augmentation onto the real-world environment.

Fisher vision of plantation onto the real world environment.

where users see through the glasses with virtual objects and or digital twins of real life objects projected by AI engines onto the glasses.

Users see through the classes with virtual objects and or digital twins of realize objects projected by AI engines onto the glasses.

For this high mix showcases from close.

For this, HIMAX showcases frontlit Aerocosmic display, one of the tiniest display modules that offers significantly higher brightness, lighter weight, and lower power consumption.

<unk> micro display.

One of the tiniest display modules that offer significantly higher.

Higher priced higher brightness lighter weight and lower power consumption.

or making the technology idea for AR headset.

Or making the technology idea for you our headsets.

To further enable our classes, we offer <unk> web site.

To further enable AR classes, we offer WAO Waveguide.

that propagates light patterns from the airport display in a predefined path towards the ice. Furthermore, for virtual objects reconstruction or digital wind formation.

That propagates led patents from the April displays in a predefined test towards the ice.

Furthermore.

For virtual objects reconstruction or this strategical wins formation.

<unk> provides industry, leading <unk> and <unk>.

HiMX provides industry's leading WO and 3D decoding technology.

Coating technologies.

which are essential in enabling both structured light and TOF or time-of-flight 3D sensors.

Our essential enabling both socialize and POF autonomous flight should essentially.

The three D sensing technology when combined with image sensors can also enables treaty based gesture recognition eliminating.

The 3D sensing technology, when combined with image sensors, can also enable 3D-based gesture recognition, eliminating the need for handheld controllers and enhancing perception of the environment, which making the idea technology for contactless interface for AR, VR devices.

Eliminating the need for handheld controllers enhancing perception of the environment.

Making the idea of technology for <unk>.

Contactless interface for VR devices.

In all these technologies I just mentioned, we have a market leading position with our technology already embedded in various products.

In all these technologies I just mentioned, we have a market-leading position with our technology already embedded in various products of quite a few of the biggest tech names in the business.

Quite a few of the biggest tech names in the business and have shipped hundreds of millions in volume with proven production with proven.

and have shipped hundreds of millions in volume with proven product development and manufacturing track records over the years.

Development and efficient manufacturing track records over the years.

<unk> is still years away from us volume deployment Timex.

While Metaverse is still years away from mass-volume deployment, Hymex is at the forefront of these key technologies to enable the industry. And we are ready to bring the Metaverse to life through partnerships with tech industries leading players who are aggressively investing in the space.

At the forefront of these key technologies to enable the industry and we are ready to bring the maneuvers to life through partnerships with Tech industries, leading players who are aggressively investing in the space.

We will not miss the next big thing.

We will not Miss the next big thing.

and are ready to seize the opportunities ahead. We will report additional progress in this new arena as it continues to develop.

And already too.

Seize the opportunities ahead.

We will report additional progress in this new arena.

He continues to develop.

For non driver IC business, we expect revenue to decline high teens sequentially in the first quarter.

For non-drive I.C. business, we expect revenue to decline high teens sequentially in the first quarter.

That concludes my report for this quarter. Thank you for your interest in Hymex. We appreciate your joining today's call and are now ready to take questions.

That concludes my report for this quarter. Thank you for your interest in <unk>. We appreciate you joining today's call and are now ready to take questions.

Yes.

Ladies and gentlemen, if you'd like to ask a question at this time you will need to press. The Star then the one key on your Touchtone telephone.

Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star then the one key on your touch phone telephone. To withdraw your question, you may press the pound key. Please stand by while we compile the Q&A roster.

A question you May press the pound key.

Brian will be compile the Q&A roster.

And our first question coming from the line of Tristan <unk> with Baird. Your line is now open.

And our first question coming from the line of Tristan Gerowitz there, DLN Southerland.

Hi, good evening.

I'm trying to reconcile the commentary that you had on the call about panel inventory adjustments.

I'm trying to reconcile the commentary that you heard on the call about.

Panel inventory adjustments.

and also, you know, some weakness in smartphones with supply expected to remain tight. So, if you could help us understand, you know, understand that you're improving your mix, but are you expecting those panel inventory adjustments to basically, you know,

And also.

And some weakness in smartphones.

With supply expected to remain tight so if you could.

Help us understand I understand that you're improving your mix.

Are you expecting those channel inventory adjustment to <unk>.

Basically.

adjust very quickly in which case then is the reason why you expect your supply to remain tight or is any other factors that I should be considering to reconcile the two.

And just very quickly in which case then.

The reason why you expect.

Hi to remain tight or is.

Any other factors that I should be considering to weaken side too.

Thank you, Tristan. I understand your question is directed towards only smartphones, am I correct?

Thank you Tristan.

I understand your question is directed towards only smartphone am I correct.

Well, even overall, because I figure that if there's panel inventory adjustment, eventually it can have an impact on the overall demand, even though you mentioned that. Actually, I think the commentary that you had for panel inventory adjustment was, if I heard well, in the large panel driver IC business.

Well, even the other or a figure that it has had an inventory adjustment eventually it can have an impact on the overall demand even though.

You mentioned that actually I think the commentary that you had for panel inventory adjustment.

If I heard well in the large panel driver IC business.

Right Okay.

Well, firstly, on smartphones, I mean, I think everybody understands the market is relatively slow.

Firstly on smartphone.

I mean, I mean I.

I think everybody understands the market is relatively slow.

uh uh globally uh having said that though i think we are

Globally.

Having said that though I think we are.

are relatively immune from the slow market in the sense that we have relatively small exposure to the smartphone market with our sales currently only about 20 percent going to smartphone and limited ironically limited by capacity as we reported repeatedly right in the past.

Relatively new from the slow market in the sense that we have relatively small exposure to the smartphone market with our sales currently only about 20% go into smartphone.

Limited Ironically is limited by capacity as we reported repeatedly in the past.

And I will admit, I don't have very good visibility on smartphone when, as you correctly mentioned, customers do have inventory pile-up.

And.

I will admit I don't have very good visibility on smartphone.

Quinn as you correctly mentioned customers who have.

Inventory pile up.

However, again, we mentioned before, our pool of capacity for smartphone and tablet.

However.

Sure.

Again, we we.

Mentioned before.

Our pool of capacity for smartphone and tablet.

It's the same pool, it's the same thing, right? So with the same limited amount of capacity available to us, we still have to make the choice of supporting tablets over smartphones, because in tablets we simply have a much higher market share with customers relying upon iMacs a lot more than smartphones.

So same pool is the same thing right. So we saw some limited amount of capacity available to us.

We still have to make a choice of supporting.

Tablet or smartphone.

Because integrity, we simply have a much higher market share with customers are relying upon high mix of Apple.

Smartphone.

So, on a combined basis, in these two sectors, which is about 40% of our total sales, more than 40% of total sales combined, we are still running a pretty serious shortage. Although, and so, I guess, it's a...

So.

On a combined basis these two sectors who wishes.

About 40% of our total sales more than 40% of total sales combined.

We are still running at a pretty serious shortage.

And so I guess the.

It is.

When we say the market visibility is limited, I think if I speak to the customer across the board, whether it's smartphone, tablet, or TV, or monitor, or notebook, I think

When we say the market visibility is limited I think if I.

I'll speak to the customer across the board, whether it's smartphone tablet or TV or monitor or notebook.

I think.

other than the very exception of automotive, where we remain super positive.

Although the very exception automotive clearly remains super positive.

the shortage there is severe and we just, you know, are begging our foundries and the customers are begging us to ship more, right? So if I put that aside, all other sectors, I have to say, when I talk to customers across the board, nobody, while nobody has very upbeat gross prospect year over year, no one is also predicting a major decline.

The shortage there is severe and we just.

In our foundry customers are begging us to ship more right. So if I put other sites or other sectors.

To say, what I talked to customers across the board nobody nobody has very upbeat.

<unk> prospect.

Year over year.

No. One is also predicting a major decline either.

And that is a reflection of low visibility that we just, you know, illiterate.

And that is a reflection of low visibility, but we just.

<unk>.

In inherited.

However, on this level of demand, last year, we, as well as the whole industry, was running at a pretty severe shortage. And we also see no major capacity increase, right, at least throughout the entire 2022. So last year, there was a shortage.

However on this level of demand last year, we as far as the whole the whole industry was running at a pretty severe shortage.

<unk>.

We have also seen.

No major capacity increase at least throughout the entire 2022 right. So last year there was a shortage this year.

He is a highly highly unlikely that demand is going to shrink in a meaningful way. So I think that is why as soon as our peers.

is going to shrink in a meaningful way. So I think that is why, as well as our peers, and our foundry partners as well, in fact, are saying the shortage is likely to remain.

And our wholesale partners as well in fact are seeing.

The shortage is likely to revert.

That doesn't.

To me I think.

We.

If there should be a demand recovery, whether it's Q2 or the second half, I think shortage certainly will become more severe, and vice versa.

If there is if there should be a demand recovery.

Q2, or the second half I think <unk>, certainly will become more severe and vice versa.

which again, we have limited visibility. We just have to watch the market very closely.

Which again, we have limited.

Ability, we just have to watch the market very closely.

I don't know if that answers your question Tristan.

Yes.

Yeah, no, I certainly appreciate the color. And then for my follow-up, I'm looking at the gross margin implications. So it sounds that as wafer pricing continues to go up, you weren't able to offset that or fully offset that in Q1. And thus, that brings basically a little bit of a sequential decline in gross margin.

I appreciate the color and then from a follow up.

And looking at the gross margin implications so it sounds that.

Wafer pricing continues to go up.

You were unable to offset that.

You said that in Q1 and.

That Duane basically liquidity sequential decline in gross margin.

Given what you've mentioned about demand and supply, do you think that you have the ability to have pricing match further wafer price increases throughout the year, given the supply constraint that you've mentioned? Or do you think that the inventory adjustment will prevent you from having, you know, pricing that will match your higher cost beyond Q1?

Given what you mentioned about the demand and supply do you think that you have the ability to have pricing match further wafer price increases throughout the year.

Given the supply constraint that you've mentioned or do you seeing that.

Inventory adjustment will prevent you.

I'm heading.

Pricing that will mature higher cost beyond Q1.

I think, firstly, we are not seeing a major or meaningful further price increase or function.

I think firstly, we have not seen.

Sure.

<unk> or meaningful further price increase of unanswered.

from this point onward, at least not in this year.

From this point onward. Additionally, this year right.

Sure.

So our higher cost in this quarter is a reflection of the pricing which took place in June 4.

So our higher cost in this quarter is a reflection of.

The pricing.

Which took place in Q4.

Compared to Q3 right so.

This is how our business goes, right? We negotiate a price, we agree a price with the foundry. We then place order and they start fabrication process for us, which typically will then take three months and you pause a little bit for back end. So that becomes the shipment. So Q4, we will start, becomes the Q1 shipment.

This is how the offices goldstrike nickel.

<unk> negotiated price work repricing with a foundry.

Got it.

Place order and they stopped fabrication process for us, which typically will take.

Three months, you cause a little bit for backend so that becomes the shipment. So Q4, we will start becomes the Q1 shipments.

So, the new prices we agreed with Foundry during Q4 become our cost for Q1, and Q3

So the new prices, we agree with foundry during Q4 become our cost for Q1.

In Q3.

foundry price was higher than that of Q3. Sorry, let me repeat. Q4 foundry price was higher than that of Q3. Meaning, our Q1 shipping cost will be higher than that of Q4. I don't know if that is clear. And that explains why we have this short-term decline in...

Price was higher than that of Q3, two sorry, sorry, let me repeat Q1 foundry price was higher than that of Q3 million. Our Q1 shipping costs will be higher than that of Q4, <unk>, but that is clear.

And that explains why we have this short term decline in.

<unk>.

in gross margin, a little bit of decline. Because our customers are basically telling us, hey, you know, you have upped your prices a lot last year. And now the market is slowing down and we really cannot accept further price up. So although our foundries are also telling us the same thing, right? They are saying, well, it looks like the market cannot accept a furthermore price hike.

In.

In gross margin a little bit of decline because our customers are basically telling us hey.

You have up your prices a lot loss last year.

Now the market is slowing down and we really cannot accept for the price up.

So although our foundries are also telling us the same thing right. They are saying it looks like the market cannot a sub.

Furthermore, price hikes.

So although the foundry is saying the same thing to us, however, the price hike that took place in Q4 already was built into our Q1 cost. And that explains.

So although the funds.

And the same thing to us however, the price hike that took place in Q4 already what's building into our <unk> cost and that explains.

a little bit of squeeze, you know, cross-margin. Now, going forward...

A little bit of squeezing our gross margin now going forward.

Again, when I talked to all my foundry partners, no one is projecting further meaningful foundry price this year. For the simple fact that if they raise the price further, the market may not be able to accept it, given the overall market environment right now.

Okay.

I talked to all my foundry partners.

No one is projecting further meaningful.

Sure.

Foundry price this year.

For the simple fact that.

No.

If they raise the price for the market may not be able to sublease given the overall market environment right now.

However, despite the slow market, our customers are not squeezing us hard for price down. Why? Because our customers, like us, and like our foundry partners, we all still worry about the overall tightness of our foundry capacity.

However, despite the slow market our customers are not squeezing us hard for price now why because our customers like us and like our foundry partners. We all still worry about the overall titles of our firm.

Answered capacity.

So we are kind of reaching a pillows.

So we are kind of reaching a balance.

How long the business is going to us I have no idea as I said.

how long the balance is going to last. I have no idea. As I said, if the second half...

The second half we see a rebound in demand then you will be good news for us and vice versa. So I think it's too early to tail. However, I think we are a lot more confident on our top line growth this year.

the we we see a rebound in demand then it will be good news for us and vice versa right so i think it's too early to tell however i think we are a lot more confident on our top nine growth this year uh than gross margin which is

The gross margin wishes last year was 48, 5% is pretty high level. So whether we can further expand on the 48, 5% of last year.

last year was 48.5%. It's a pretty high level. So whether we can further expand on the 48.5% of last year, I have no total confidence. But we also don't think we will depart too much from that if we have to go a little bit lower. So with higher top line growth.

No.

<unk>.

Total confidence, but we also don't think.

We want to depart too much from that.

To go a little bit slower so we saw higher topline growth.

and a little bit of uncertainty on gross margin, we still remain pretty good confidence on our bottom line as well. I think that's a quick summary of the full picture of our 2022 outlook. Great. That's very useful.

Certainly on gross margin, we still remain pretty good confidence.

Bottom line as well I think thats the.

A big picture of.

A quick summary of the full picture of our 2022 outlook.

Great.

Very useful thank you very much.

Thank you Tristan.

Our next question coming from the line of Jerry Hsu with Credit Suisse. Your line is open.

And our next question coming from the line of Jerry <unk> with Credit Suisse. Your line is open.

Yeah.

Thanks for taking my question.

Thanks for taking my question. Hold on, I just want to follow up on your comment on gross margin. As you mentioned that Foundry is less likely to further increase the price in this year. And then I think you also mentioned that automotive will probably be the largest contributor of your revenue.

Just wanted to follow up on your comment on gross margin.

As we've mentioned that foundry is.

Less less likely to to further increase the price.

In this year.

And then I think you also mentioned that the automotive part of either largest.

Contract revenue.

Yep.

Was it with.

So with this dynamic, does that mean that your gross margin actually could at least hold at the current 46 to 48 percent level if the end demand does not change too much?

Does this dynamic does that means that the gross margin actually could at least hold at.

Correct.

46% to 48% level.

And demand has not changed too much.

I think thats, a fair assumption yes.

I mean, given, you know, all other things pretty much staying close to the current level, I think our mix is highly likely to improve, given the fact that we are very confident about our automotive sector outgrowing the others, while automotive in general enjoys a better margin.

I mean, Kevin.

All the things pretty much stay in or close to the current level I think our mix is highly likely to improve given the fact that we are very confident about.

Automotive sector outgrowing.

The others are automotive in general enjoys better margin.

Then the rest.

So given all other factors being similar to the current level then yes, I think there's a good chance we may actually.

So given all other factors being similar to the current level, then yes, I think there's a good chance we may actually sustain or improve our cross-martial from this point onwards.

Sustain or improve our gross margin from <unk>.

This point onward.

Okay got it.

Okay, got it. Hello. And just a quick follow-up. Yes. Thank you. Just a quick follow-up on the, you know, the Q1 guidance for the non-drivers because I think you have guided us.

Quick follow up yes. Thank you just a quick follow up on the.

The Q1.

Our guidance for the non driver because I think you have guided.

Uh huh.

On driver but.

non-driver, but you only mentioned that timing control is declining single-digit. I'm just wondering what is causing the non-driver business to see a double-digit decline? What's the missing point here?

You only mentioned that timing controllers declined single digits.

Wondering.

What is causing the.

The non driver businesses.

A couple of digit decline well.

What the missing point of view.

I think.

T Con there is this a short term <unk>.

T-Con, there's a short-term sequential decline, right? The Chromebook, TV, you know, being soft, etc., you know the story, right? So, having said that, I think we are...

<unk> declined the chromebook.

<unk> been soft et cetera, you will know the story right. So having said that I think we are.

very confident about our TECOM growth for this year, year over year, I think overall.

Very confident of our telecom growth for this year year over year I think overall.

Because, you know, we mentioned, you know, we have positioned ourselves much better right now compared to a year ago, when whether it's TV, notebook, or monitor, we are focusing on higher-end products and having a stronger and more direct relationship with end customers, right? So we are fairly confident about T-Com growth.

We mentioned, we have position ourselves much better.

Right now compared to a year ago.

These TV notebook monitor we are focusing on a.

Higher end products.

Kevin.

Sean good more direct relationship with end customers right. So we are fairly confident about telecom growth also in addition to that.

our bundle sales approach, I think it's going to play a role here as well. Bundle sale means means TCOM bundle together with Stripe ISC, right? It's a total solution.

Our bundled sales of those I think it's going to play a role here as well.

Wholesale means means telecom bundled together with driver IC is a total solution.

So we are saying T-Con, sequential decline in this quarter will be a short-term phenomenon. For the whole year, we still remain confident.

So so so we're saying T con.

Sequential decline.

In this quarter will be a short term phenomena for the whole year, we still remain confident I think.

I think the decline for non-drivers over the missing point, I think it's in the CMOS immune sensor primarily.

You were saying the decline for non driver overall of the missing point I think is in the Cmos image sensor primarily.

A little bit on <unk>.

A little bit on W.O.O. where, you know, a major customer's, their adequacy products is declining, evolving, but that is playing much less impact on us now than before. C.I.S. where we have a major market share in notebook, and notebook short-term demand is not good, although notebook, I think

Our major customers. They are legacy products is declining in volume, but that is playing much less impact on us now than before.

Crs.

We are a major market share in notebook notebook shorter.

Short term demand is not good although notebook I think.

If I may comment a little bit on <unk> outlook for this year.

If I make comment a little bit on CIS, I'll look fully.

For the notebook, Mark is undergoing a major upgrade in their camera from HD to Full HD.

The notebook market is undergoing a major upgrade in seamlessly in their camera from HD to full HD right. So that is good news for us. So we are going to benefit.

So that is good news for us. So we are going to benefit, especially starting from second half of the year, from this trend. Having said that, I think Webcam, which was a major contributor last year.

Especially starting from second half of the year.

Sure.

From this trend, having said that I think.

Ken.

<unk> was a major contributor last year because of the Covid situation.

because of the COVID situation. And, you know, when you can upgrade your notebook, you buy a new webcam to support your video conferencing, right? So there was a major, major surge in demand last year, but with COVID, you know, hopefully, you know, leaving us, the webcam demand is likely to decline, right? So I think we are,

When you cannot where youre youll notebook you buy a new attempt to loss to pull your videoconferencing right. So so there was a major a major surge in demand last year, but with Covid.

Hopefully, leaving us.

Yes.

So what kind of demand is likely to decline right. So so I think.

We are.

We are building in that assumption into our CIS forecast, and that result in a slower CIS. And also, in Q1, we do see the trend of webcam having declined in projection.

We are building in that.

That assumption into our forecast as a result.

Lower Crs and also in Q1 than we do.

We do see the trend of our Tam.

<unk> declined in projections.

Okay got it. Thank you for the color and then maybe just one last question I think you spent some paragraph.

Okay. Got it. Thank you for the caller. And then maybe just one last question. I think you spent some paragraphs discussing the coverage.

Cutting the coverage.

Question is actually more related to the different display technology.

My question is actually more related to the different display technology. I think in the previous couple of years, we have been shipping the L-Code for some of the AR glasses, but I think more recently, we can see that some of the display technology has been shifting to OLED, silicon, and also potentially in the future.

I think in the previous.

A couple of years have been shipping <unk>.

Got it but I think more recently, we can see that now.

The technology is shifting to silicon and also potentially.

Yeah.

I just wanted to know from your point of view, if you look at cost versus the other technology.

I just want to know, from your point of view, if you look at the L-cost versus the L2 technology, do you think that you have enough confidence or breakthrough that can bring L-cost back to become the mainstream in the next couple of years?

I think that you have.

Competence.

Breakthrough that can bring.

<unk> cost back to become the mainstream in the.

The next couple of years.

Thank you Terry.

A question.

Yes.

I think you correctly mentioned...

I think.

You correctly mentioned.

We have been in AI causes for many many years and we are certainly not out.

We have been in AR classes for many many years right and we are certainly I mean know that we are the pioneer in providing

We are the pioneer in providing the key technology to enable Aircastle Squishes Michael display.

technology to enable AR glasses, which is micro-display.

So we are products of literally all of the most notable air classifications.

So we are told us of.

Sure.

Literally all of the most notable.

Cost.

products so far, although none of them have been a commercial success as we all appreciate.

Products, so far although none of them have been a commercial success as we all appreciate now I think the the lessons learned.

Now, I think the lessons learned across the whole industry, us included, and most importantly our wine customers, through all these years, is that we have finally come to a good consensus.

Across the whole industry is included and most importantly, our customers through all these years is that.

We have finally come to consensus is too high quite kind of a product or technology required.

as to what kind of products or technology is required.

Required.

tool, for the industry tool.

For the for the industry tool.

Put forth put forward.

put forth, uh, put forward a, uh, a

Sure.

Our glasses.

which is attractive enough for general public.

Which is attractive enough for general public.

Right. So I am not talking about Fintech technology, we see I'm, just talking about common sense right. Firstly unit to have a 65000 design credits similar to <unk>.

So I'm not talking about fancy technology here, I'm just talking about common sense, right? Firstly, you need to have a sleek design, fancy design, right? Similar to your sunglasses, with similar shape and weight, even, right? And that is the first requirement, very important.

Your sunglasses with similar shape and weight EBIT right.

And that is the first one of course the requirement very important.

Secondly, you need to have your display be in full color.

Secondly, you need to have video display.

<unk> full color.

and then we finish to provide over a decent image quality.

And then this one is to provide over a decent image quality.

and certainly affordable price and lastly but very important

And.

Certainly affordable price.

Lastly, but very importantly.

a decent, large enough size of field of view, FOV. So all these are the required areas for a product which hopefully will really attract the attention of general public.

Decent large enough size of your appeal.

So all these are the required.

Sure.

Areas.

For a product, which hopefully will really attract the attention of general public.

And our products together with our customers in the past.

and our products together with our customers in the past.

you know, they meet many of such criteria, right? So throughout all these years, I think the industry has finally come to this conclusion that this is the target you are shooting for. So can we provide the technology? And I can tell you with a good degree of confidence that so far as of today, we can't, but we feel we are getting very, very close. That's a key message we want to deliver.

They missed many of Susquehanna areas right. So throughout this year I think the industry has finally come to visit us.

But this is the tabular shooting for so can we provide the technology.

I'd tell you with a good degree of confidence that so far as of today, we can't but we feel we are getting very very close but the key message delivery.

So, back to your question, you know, how does our air course compare to other computing technologies for AR glasses?

So.

Back to your question, how does <unk> compare to other competing technologies for glasses.

AR glasses, by definition, is a see-through glasses device, right, i.e. you need to have

<unk> by definition is a see through.

Classes devices right I E you need to have for.

what we call micro displays. Displays which are tiny and they have to sit on the side.

While we call Michael displace displays which are tiny.

They have to sit on the site.

near your ears, right? Because they can't sit in the front because that will block your side of view, right? So they need to sit in the side. Since they are sitting on the side, they would need some optical mechanism, including WebSkies, to lead the light, the image, into your front, right? So those are the basic fundamental requirements.

Your years right because they can sit in the front because our <unk>.

<unk> right. So the interest in the site.

Since they are sitting on the side.

Neat would need some optical mechanics them, including with guys to lead the light the image into your front right. So those are the basic fundamental requirement. It doesn't matter how part of the display you use you are two positives.

It doesn't matter what kind of display you use, you have to pass this, you have to go through this requirement. So,

Because of this requirement.

So.

So so.

So okay.

So, again, to achieve this basic requirement, and also the target specs, right, the target objectives of the general consumers.

To achieve this spacing requirements and also the target.

The target specs right the target objectives of the of the of the general consumers.

Most very importantly for micro display you are talking about site.

Most very importantly for micro display, you're talking about size, price range, power consumption and cost.

Our pricing power consumption and cost.

you know they all we now have a good consensus what kind of tariff we need to make to achieve size, brightness, power consumption and cost.

They all we now have to book consensus quite kind of hockey we need to make.

We need to achieve to achieve sites brightness and power consumption cost for.

Firstly, on size, which is the most important, because without the right size, you just cannot make the fancy glasses, and that you go back to the previous failures. So size is the utmost, most important criteria. To achieve the right size, really you are talking about, for a micro display you can have two different types. One is what we call self-illuminating type, the other one is not.

Firstly on site, which is the most important because otherwise size you just cannot metaphen CE courses.

If you go back to the previous failures. So sites is the utmost multipolar Syria to achieve the right size.

Really you are talking about a formula display you have to put the right types. One is what we call service same illuminating type the other one is not.

The importance of self-illuminating type is that because it's self-illuminating meaning you don't need a external

The importance of said, we don't need any type is that.

Because it certainly illuminated meaning you don't need external optical engine.

to enable the illumination, right? And once you have external optical engine, the size, you fail the criteria already. So you are already out, right? So for self-illuminating technologies, you already narrowed down your candidate to three types, meaning AMOLED.

To enable that.

The elimination right.

Do you have an easterner optical engine the size you further criteria already so you already right. So certainly then within technologies you're already there.

All your candidates to three types.

Types, meaning more of it.

micro-LED and our front-lit L-cores. I emphasize front-lit, it's very important because other types of L-cores are not self-illuminating, including our other L-cores.

Michael Michael Michael that sorry, Michael.

Micro OLED and our front lit aircrafts.

Besides from the it is very important because other types of course are.

Not to say, we dominated including our other costs.

from the module, because we are putting our LED alongside the micro display. And so from the customer's point of view, our display module is very similar in size and weight compared to micro LED and other self-illuminating technologies, right? So only these three types are self-illuminating and they can...

Frankly, as a module because we are we are putting our.

Loan size alongside the micro display and so from the from the customer's point of view our display module is very similar in.

In size and weight compared to Michael.

Michael the other so illuminating.

Technology, sorry, so on industry types are eliminated.

Illuminate and they can only they can pass the first criteria most importantly, the sites.

Only they can pass the first criteria, most importantly the site.

Now, the second problem is the brightness, the second biggest problem is the brightness of the micro display. Why? Because I mentioned your micro display is sitting on the side, they need to pass the light through a waveguide in the front. Waveguide, there are a couple of mainstream technologies.

Now the second problem is.

<unk> the second biggest properties brightness of.

The micro display.

Because I mentioned.

Your micro displays are sitting on the site the.

The into parts of their lives through our site in the front with guide there are a couple of our mainstream technologies.

You know, what we offer in our WHO is certainly one of them. But, you know, regardless of which type of technology you talk about for World Guide, the line efficiency...

Offering.

It's certainly one of them but in.

Regardless of which type of technology, you talk about the forward guide the light efficiencies very poor.

5% is now people's very, very difficult target right now, 5% like...

5% is now people saw very very.

Difficult target right now, 5% LAE efficiency, meaning you always thing or most of your light with vast majority of your light through the traveling in the optical mechanism.

meaning you are wasting most of your light, vast majority of your light, through the travelling in the optical mechanism.

But the QMB requires certain brightness to see the display, right? So how do you, uh, how do you, uh...

But <unk> require certain partners to see the display right. So how do you.

How do you.

how do you resolve the issue, you need to have your micro display being very, very bright. Right, so this second criteria, again, it's very, very, it's vital, right?

How do you resolve the issue in terms of your micro display.

Very very bright.

So.

So this second criteria again is very well is right upfront so.

So, from this second criteria's point of view, in our view, micro OLED is already out, because micro OLED right now, it needs to improve its brightness by several.

From the second criteria is point of view in our view Michael.

Michael It is already out because Michael all of it right now.

Need to improve brightness by several orders of magnitude is just achievable in any foreseeable future in our view right because it's simply too dark.

It's just unachievable in any foreseeable future in our view, right? Because it's just simply too dark.

So the other.

So the other, so now you are leaving with our air-cooled cycle display, which has enough, right?

So no your linear with our alcohol cycle display which is in our prices.

and also microLED, however for microLED, indeed they can project with enough brightness, but microLED can only monochrome color in the display, so to make color display, I mentioned that's a fundamental requirement as well, they need RGB three panels combined.

And also a story of it.

However for Michael.

Indeed, they can project with and uprightness by Michael Caine monochrome color display so to cover this color display I mentioned, that's a fundamental requirement as well.

<unk> III panels combined.

And when you are RGB, you are failing your size test again, and also you are failing your power consumption test, not to mention your cost test.

And when you have RGB, you offsetting Europe sized test okay.

Also your trading you have pockets of your test not to mention your cost per test.

So while there are talks about customers using microLED, from our insiders' point of view, I think they have such hurdles and challenges.

So while there are talks about customers using Michael.

From our insider's point of view I think they have floor.

Such hurdles and challenges that are just inconceivable to.

inconceivable to get around in any foreseeable future.

To get around.

In any foreseeable future.

Now finally back to our own front lit <unk> micro display.

Now, finally, back to our own front-lit Airpods micro display.

Admittedly, we introduced that kind of technology years ago, but we kind of slowed our development over the last couple of years. Why? Because the market was simply not there.

Admittedly, we introduced a cough technology years ago years ago.

But we kind of slow down development over the last couple of years why because the market was simply not there.

However, we never stopped talking to our customers now with this renewed very vibrant in towards a meta was recently, we have seen a very renewed interest cost.

However, we never stopped talking to our customers. Now, with this renewed and very vibrant interest on Metaverse recently, we are seeing a very...

our Air Force again. So they are customers who are trying to

Of course again, so they are customers who are trying to.

Uh huh.

utilize our existing from the Aircos products in their next-generation design, which admittedly is not ideal, right? They don't really exactly pass all the factors I just mentioned. However, there are also customers who are taking a longer-term approach and they are working with us, starting from specs, discussions, and code joint development.

<unk> utilized our existing from the vehicles product in there.

Next generation design.

Admittedly is not ideal right. They don't exactly plus all the factors I. Just mentioned however, there are also customers who are taking a longer term approach and they are working with us starting from specs discussions and cold joint developments.

for a idea from the air quality standpoint that really fits the bill of all criteria I just mentioned. And we are truly confident the technology is there. We just need a little bit of time and resources to make it happen. So that is, I apologize for a slightly lengthy response, but this is a complicated issue. And I appreciate you asking the question and giving me the opportunity to explain.

Or a <unk>.

From the ecosystem that really fits the appeal of all criteria that I just mentioned and we are fairly confident the technologies. There, we just need a little bit of time and resources to make it happen so that is.

I apologize for a slightly lengthy response, but this is a complicated issue and I. Appreciate you asking the question and giving me the opportunity to explain it.

Okay.

Yeah.

very detailed question and help us to understand a lot about the difference between these technologies. Thank you.

Alright detailed question and help us to understand a lot about the difference between the technology. Thank you.

Thank you for the question.

Okay.

Our next question coming from the line of Donny Chim with Nomura Security. Your line is open.

Next question coming from the line of Donington with Nomura Securities. Your line is open.

Hi Jordan, Eric, thank you for taking my question. I just have two very short questions. The first one is that

Hi, Jordan, Eric. Thank you for taking my question I just have two very short questions. The first one is that.

It sounds like back in late last year, originally we were relatively positive on the first quarter outlook

It sounds like back in the last two originally I think we were relatively positive on the first quarter outlook.

And then maybe after this one to two months the market has been weaker than expected. So just curious about that.

and then maybe after this one to two months the market has been a little bit weaker than expected so just just curious about that uh what kind of products uh in that has been uh weaker than what you have seen maybe in before one and two months ago uh for example it's like smartphone or tablet or any other applications that you are seeing or weaker than expected and

What kind of products.

That has been.

Weaker than what you have seen maybe one.

<unk> two months ago.

For example, like smartphone or tablet or any other applications that you are seeing weaker than expected demand in the past one to two months.

And secondly is regarding to the gross margin again so.

and secondly is regarding to the gross margin again so i remember that automotive driver ic gross margin should be higher than operate f

I remember that automotive driver IC gross margin should be higher than corporate average.

So I'm just curious that if looking at the fourth quarter gross margin and the first quarter gross margin.

So I'm just curious.

If looking at the fourth quarter gross margin in the first quarter gross margin.

Do you think the automotive drivers' gross margins are all higher than the corporate average in these two quarters or is it also declining a little bit in the first quarter?

The automotive business.

Driver IC gross margin all higher than corporate average and these two quarters or is also declining a little bit in the first quarter. Thank you.

Firstly on the first quarter outlook.

I'll first be on the first quarter outlook.

I think your impression about, like, slowing the market demand, I think we kind of get a similar feeling. I think it's primarily for smartphones.

I think.

Youll impression above.

Slowing market demand I think we kind of get a similar feeling I think it's primarily for smartphone.

And and again automotive remained very strong.

And again, automotive remains very strong, and TV, I think, overall is slow, although we feel there are talks about customers assorting their inventory, and hopefully starting from Q2 or the second half, there will be renewed demand coming from.

And.

TV I think overall, it's a slow although we feel they are possible.

Customers are shopping their inventory and hopefully starting from Q2 or the second half there'll be renewal demand coming from TV and Iot.

And actually, the visibility is not great in the sense that...

Visibility is not great in the sense that.

you know, and customers are revising up their forecast. Rather, they are staying on the sideline, but they are not revising down their forecast either. Right? So I think your impression of a slowing down forecast may be primarily driven by smartphone.

And customers are revising their forecasts rather.

They are staying on the sidelines, but they are not revising downward our forecast either.

Right.

So I think.

Your impression of slowing down focus may be primarily driven by smartphone.

Your second question about automotive, I think...

Your second question about automotive.

Zinc.

Our core gross margin and related automotive I think in.

course margin and related to automotive, I think, in

Sure.

I think certainly automotive is gross margin higher than our average and I think more importantly the visibility is much better as well. Visibility not in terms of just sales forecast but also in terms of price.

I think certainly automotive is gross margin higher than our average and I think more importantly, the visibility is much better as well.

Visibility in terms of in terms of just the sales forecast, but also in terms of pricing right.

Right. I cannot say I have very strong visibility for TV monitor notebook.

Right.

Cannot say I have very strong visibility for TV monitor notebook.

or other things, but I can say with good confidence that there will be a bit of price involved. So I think that's an important factor. And also, overall, I think...

A lot of things, but I can say with confidence the visibility of pricing volatile. So I think thats an important factor.

And also overall I think.

In Q1, for example, large display driver, I think based on our guidance, it's going to be about flat, while overall guidance is slower, right, and large display driver has lower gross margin compared to Q1.

Yes.

<unk>.

In Q1 for example, large display driver.

Sure.

I think based on our guidance.

It's going to be above sweat.

Overall guidance slower unless display driver has lower gross margin compared to.

last year compared to a small smartphone or tablet or certainly old. So I think that also explains partially.

Last year compared to a small smartphone or tablet or certainly also so I think that also split partially.

the lower gross margin on top of the explanation I gave to Tristan earlier.

Lower.

Gross margin on top of the explanation I gave two shifts that earlier.

Okay, I got it. So, just to clarify, so in terms of the ranking of the gross margin, it's like auto the highest, right? And followed by...

Okay got it so just just to clarify so in terms of the <unk>.

<unk> gross margin is like autos highest right and followed by.

largely like small, medium drive IC, and lastly, large input drive ICs. Is that correct? Correct.

Largely like small medium driver IC and lastly.

Display driver Ics is that correct.

Correct.

Okay. Thank you so much Jordan.

Thank you Tony.

Okay.

And I'm showing no further questions at this time I would now like to turn the call back over to Tony any closing remarks.

And I'm signing off for the questions at this time. I would now like to turn the call back over to Joanne for any closing remarks.

As a final note our Wrigley.

As a final note, Eric Lee, our Chief IR, PR Officer, will maintain investor meetings.

Our chief peer.

<unk> will maintain investor meeting.

marketing activities and continue to attain VISTA coverage.

Marketing activities and continue to attain investor conferences, we announced the details as they come about thank you.

We will announce the details as they come about. Thank you and have a nice day.

Have a nice day.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.