TFT LCD driver IC maker Himax Technologies posted third-quarter 2010 revenues of US$138 million, down 26.3% sequentially but still meeting its adjusted forecast. Although the company expects flat sequential growth for the fourth quarter, small-to-medium size driver IC products should still see stable growth.

The company pointed to inventory adjustment by customers for the quarterly contraction in revenues.

Despite reporting a larger decline versus its peers, Himax is confident that capacity expansion by China-based panel makers will bring new opportunities for driver IC makers.

Non-driver IC products accounted for 8.4% of Himax's third-quarter revenues, which was also lower than expected. The company also blamed inventory digestion by customers for the disappointing results. China-based customers raised inventory levels in the second quarter, but the government unexpectedly introduced tighter regulations on white-box handsets, which affected subsequent shipments.

However, with customers having success in clearing inventory, Himax is seeing a rebound in orders. Himax's non-driver IC portfolio includes LCOS pico projectors, and CMOS image sensors, and white-light LED driver ICs through its subsidiary.

Third-quarter gross margin increased 2.5pp to 22.9%. Quarterly net income came to US$400,000. The company expects flat sequential growth for the fourth quarter, and gross margin should fall 1-2pp.