Investment Rating - The report assigns an "Increase" rating for the industry, indicating a potential growth exceeding 15% relative to the CSI 300 index [14]. Core Insights - Rokid Glasses, launched on September 1, 2025, integrates voice, photography, and display capabilities, making it a rare full-function AI smart glasses in the market [4][6]. - The product features advanced voice control, real-time translation, and navigation prompts, along with a camera for recognition and recording, enhancing user experience [6]. - The glasses achieved impressive pre-sale results, with over 40,000 units sold within five days, indicating strong consumer demand for display-enabled smart glasses [8]. Summary by Sections 1. Overview of Rokid Glasses - Rokid Glasses were officially available for pre-sale on September 1, 2025, priced at 3,299 CNY, with a charging case costing 399 CNY and an overseas price of 599 USD [5]. 2. Core Functions of Rokid Glasses - The glasses combine voice, photography, and display functions in a lightweight design under 50 grams, distinguishing them from competitors that offer limited functionalities [6]. - They support dual-way real-time translation and can sync with mobile screens, addressing cross-language communication barriers [6]. 3. Technical Specifications of Rokid Glasses - The glasses weigh approximately 49 grams and utilize a single optical machine with dual display technology, achieving a maximum brightness of 1500 nits for outdoor visibility [7]. - They are powered by the Qualcomm AR1 chip and NXP RT600 dual-chip architecture, balancing high performance with low power consumption [7]. 4. Future Outlook - The rapid sales growth of Rokid Glasses suggests significant market potential for waveguide AR glasses, with sales nearly doubling the total shipments of similar products in the first half of the year [8]. - However, challenges remain, including high BOM costs related to MicroLED and waveguide technologies, which can account for up to 50% of the total cost [8].

Financial Performance - Q4 2024 revenues reached $237.2 million, a sequential increase of 6.7% and up 4.2% year over year, exceeding guidance [5][12] - Gross margin for Q4 was 30.5%, up from 30% in the previous quarter and 30.3% a year ago, driven by a favorable product mix and cost improvements [6][11] - Q4 profit per diluted ADS was $0.14, significantly above the guidance range of $0.093 to $0.11 [6] - Full year 2024 revenues totaled $906.8 million, a decline of 4.1% compared to 2023, with operating expenses down 5.6% [12][15] - Net profit for 2024 was $79.8 million or $0.46 per diluted ADS, up from $50.6 million or $0.29 per diluted ADS in 2023 [16] Business Line Performance - Revenue from large display drivers in Q4 was $25 million, an 18.6% sequential decline, attributed to customer destocking and price competition [6][7] - Small and medium-sized discrete driver segment revenue was $166.8 million, a 7.4% sequential increase, driven by strong automotive and tablet market sales [7][8] - Non-driver sales in Q4 reached $45.4 million, a 24.9% increase from the previous quarter, primarily due to a one-time product shipment [9] Market Performance - Automotive driver sales increased by nearly 20% year over year in 2024, significantly outpacing overall automotive market growth [12][22] - Automotive TDDI and key car sales surged by more than 70%, reflecting strong adoption across the board [12][13] - Revenue from large panel display drivers decreased by 28.3% year over year, accounting for 13.9% of total sales [13][14] Company Strategy and Industry Competition - The company is focusing on advancing automotive OLED technology and expanding its technology development beyond display ICs [22][23] - Himax is well-positioned in the automotive display market, with a strong emphasis on TDDI technology and partnerships with leading panel makers [36][37] - The company is also exploring opportunities in the AI and IoT sectors, with significant advancements in smart home applications and AI sensing solutions [24][42] Management Commentary on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic challenges but emphasized strict budget and expense control measures [11] - The company expects Q1 2025 revenues to decrease by 8.5% to 12.5% sequentially due to seasonal demand [19] - Management remains optimistic about the automotive business and anticipates continued growth in TDDI and OLED technologies [22][37] Other Important Information - The company reported a strong positive operating cash flow of $35.4 million for Q4 2024 [16] - Inventory levels have declined to healthy levels, with year-end inventory at $158.7 million [17] - Capital expenditures for 2024 were $13.1 million, down from $23.4 million in 2023, primarily due to reduced spending on in-house projects [18] Q&A Session Summary Question: Updates on CPO adoption and competition landscape - Management indicated that 2025 will focus on engineering validation with limited revenue contribution, expecting mass production to commence in 2026 [55][56] - Annualized potential revenue for CPO could reach hundreds of millions of dollars, with significant demand anticipated [58][62] Question: Core driver IC business outlook - The sequential decline in Q1 is attributed to seasonal factors, with no significant changes in inventory levels reported [64][66] - Gross margin is expected to remain stable due to a favorable product mix, despite lower sales contributions from automotive [66][67]