Himax Technologies, Inc.

three product lines within the large-panel driver IC segment declined, primarily due to the absence of the traditional system of shipping momentum and a volatile microeconomy environment, as well as the customers pulling forward purchases in trial quarters. Sales of large-panel driver IC accounted for 9.5% of total revenues for the quarter, compared to 11.6% last quarter, and 13.8% a year ago. Revenue from the small and medium-sized display driver segment totalled $141.0 million, reflecting a slight decline of 2.4%. Q3 automotive driver sales, including both the traditional DDIs, increased single-digit quarter-over-quarter outperforming our guidance of the slight sequential decline, indicating resilient underlying demand by global partners in automotive sales. The growth was mainly driven by replacements in both TDDI and DDI products, with customers adhering to a make-to-order model and keeping inventory lean in view of an uncertain demand outlook. Power of the Multi-Business, comprising DDIC, TTDI, T-CON, and OLED IC cells, remained the largest revenue contributor in the third quarter, representing over 15% of the total revenue. Meanwhile, revenue for both smartphone and tablet IC segments declined quarter over quarter as customers pulled forward purchases in prior quarters. The small and medium-sized display driver IEC segment accounted for 17.8% of total sales for the quarter, compared to 67.3% in the previous quarter and 69.9% a year ago. Q3 non-driver sales reached $39.2 million, a 13.7% decrease from the previous quarter, but outperformed our guidance range primarily attributable to increase the human of T-Con for automotive applications. IMEX continues to hold an undisputed leadership position with a dominant market share in automotive T-Con. T-Con business accounted for around 12% of total sales, with notable contributions from automotive T-Con. Driver products accounted for 19.7% of total sales, as compared to 21.1% in the previous quarter and 16.3% a year ago. Third quarter operating expenses were $16.7 million, an increase of 34.2% from the previous quarter and roughly flat compared to the same period last year. The sequential increase was mainly attributed to the annual bonus compensation, which we award employees at the end of September each year, typically resulting in much higher Q3 employee compensation expense compared to our quarters of the year. Increased step-up expenses salary expenses as well as the appreciation of the NT dollars against the U.S. dollar in Q3 were also factors behind the sequential increase. Our annual bonus compensation grant for 2025 was $7.7 million, slightly higher than the guidance of $7.5 million as the bonus amount Determined based on the expected four-year profit was a revised upward following a much improved Q3 financial performance. Of the $7.7 million, $7.5 million was immediately invested and expended in the third quarter. Including the portion of the award grant in trial years, the total bonus expenses for Q3 2025 amount to $8.1 million, significantly lower than $13.9 million recorded in Q3 2024. For reference, the annual bonus granted for 2024 and 2023 were $12.5 million and $10.4 million respectively. Of which, $11.2 million and $9.7 million were vested and dispensed immediately. Amid ongoing macroeconomic challenges, we continue to exercise strict policies and dispensed controls. First quarter operating loss was $0.6 million, representing a negative operating margin of 0.3%. compared to 8.4% in the previous quarter and 2.6% for the same period last year. The sequential decline was primarily attributable to higher employee bonuses, which, as stated earlier, was $8.1 million compared to $0.8 million last quarter, coupled with the lower revenues and gross margins. The year-over-year decrease was mainly due to the reduced sales. Q3 asset tax profit was $1.1 million, or $0.6 per diluted ADA, compared to $16.5 million, or $0.95 per diluted ADA last quarter, and down from $13.0 million, or $0.7.4 in the same period last year. Turning to a balance sheet, we had a $278.2 million of cash, cash equivalent, and out of financial assets as of September 13, 2025. This compares to $206.5 million at the same time last year and $332.8 million a quarter ago. The sequential decline in cash balance mainly reflected the $64.5 million dividend and $13.1 million in bonus payout. Q3 operating cash inflow was $6.7 million, compared to an inflow of $15.5 million in the prior quarter. The sequential decrease mainly reflected the higher accounts payable payments, and Q3 for inventory procured entire quarters to support customers' demand, along with employee bonuses and payments mentioned above. The employee bonus paid out this year included $7.3 million for the immediately vested portion of this year's award and $5.8 million for the vested award granted over the past three years. We had $30.0 million of long-term unsecured loans at the end of Q3 of which $6.0 million was the current portion. Our quarterly inventories were $137.4 million, a slight increase from $134.6 million last quarter and lower than $192.3 million. $5 million a year ago. After several quarters of inventory declined from its peak during the industry-wide supply shortage, Q3 inventory slightly increased but remained at a healthy level. As mega-economic uncertainty limits visibility across the ecosystem, we will continue to manage our inventory conservatively. Accounts receivable at the end of September 2025 was $200.7 million, decreased from $1,219.0 million last quarter and down from $224.6 million a year ago. ESO was 87 days at the quarter end as compared to 92 days last quarter and a year ago. Third quarter capital expenditure was $6.3 million versus $4.6 million last quarter and $2.6 million a year ago. Third quarter capital was mainly for R&D related equipment for our IT design business and the construction in progress for the new preschool near our tiny headquarters built for employee children. As of September 13, 2025, IMAX had a 174.5 million ADS outstanding, little changed from the last quarter. On a fully diluted basis, the total number of ADS outstanding from the third quarter was 174.4 million. Now, turning to our fourth quarter 2025 guidance. We expect Q4 revenues to be flat sequentially. Close margin expected to be flat to slightly up, depending on product mix. Q4 profit attributable to shareholders is estimated to be in the range of 2.0 to 4.0 cents per suing diluted ADA. I will now turn the call over to Jordan to discuss our Q4 2025 outlook. Jordan, the floor is yours. Welcome.

Thank you, Karen.

The U.S.-China terrorist negotiations recently reached a preliminary threshold, sending a positive signal to the market. Yet, most panel customers continue to adopt a make-to-order and maintain low inventory levels. In the automotive display IC business, Timex is the most important market accounting for over 50% of total revenues. Demand visibility remains low as customers continue to act conservatively and sustain lean inventory levels. Despite the limited short-term visibility in the automotive market, we remain optimistic about our automotive business outlook for the next few years, backed by our leading new technology offerings and comprehensive customer coverage. Meanwhile, we continue to focus on the expansion into emerging areas beyond display ICs, including ultra-low-power AI, CPO, and smart glasses, all novel applications characterized by high growth potential, high ID value, and high technological barriers that are well-positioned to become new growth drivers for Himex soon.