Himax shares struggle on first day of US trading

Shares of Himax Technologies Inc (奇景光電) struggled on Friday, the Taiwanese semiconductor designer's first day of trading as a public company.

The stock ended at US$8.75 a share on Friday on the NASDAQ Stock Market, after 52 million American depository shares priced at US$9 apiece, the high end of the expected range.

Himax's IPO, which raised US$468 million, is the largest technology offering to hit the US so far this year, according to data from Thomson Financial. The company designs semiconductors for flat-panel-display products.

Like many semiconductor designers, it operates in a highly cyclical industry where prices are usually heading downward.

Nevertheless, Himax's revenue for last year rose 80 percent to US$540.2 million compared with 2004, as it sold more semiconductors and gained market share with major customers, overcoming a pricing decline. Net income increased 71 percent to US$61.6 million during the same period.

Three-quarters of the shares sold in the IPO came from existing owners, so those proceeds go directly into their pockets, not to the company's coffers. Sellers in the IPO included two companies that are publicly traded in Taiwan -- Yuen Foong Yu Paper Manufacturing Co (永豐餘) and China Development Industrial Bank Inc (中華開發工銀).

Also selling small segments of their total holdings was company chairman Wue Biing-seng (吳炳昇); chief executive Jordan Wu (吳炳昌); and chief technical officer Tsai Chih-chung (蔡志忠). All three continue to own shares in the company.

Himax's fortunes are closely tied to that of its top two customers, Chi Mei Optoelectronics Corp (奇美電子) and Chunghwa Picture Tubes Ltd (中華映管), which together accounted for 75 percent of its revenue last year. Chi Mei Optoelectronics, its largest single customer -- accounting for 59 percent of revenue last year -- is also one of Himax's largest shareholders, beneficially owning approximately 13.6 percent of the designer's outstanding shares as of Dec. 31. Chi Mei didn't sell any shares in the IPO.

Among the risks faced by new investors in the IPO is the fact that Himax has a limited operating history; it began operations in June 2001. The company warns in its prospectus that its recent growth rate isn't sustainable and will slow.