AMS-Osram shares set for biggest ever fall after microLED project cancelled
29/02/2024 09:26
Feb 29 (Reuters) - Zurich-listed shares in AMS-Osram
AMS.S were set for their biggest fall in company history on
Thursday after the Austrian chipmaker said it would re-assess
the strategy for its microLED technology that analysts say could
be used in Apple watches.
The stock was trading 39% lower at 0920 GMT after AMS-Osram
said a customer cancelled the project.
"Discussions with the customer are ongoing," AMS-Osram said.
It declined to disclose the name of the customer.
J.P. Morgan said in a note the cancellation, possibly
related to Apple AAPL.O , would have a substantial impact on
the company given the very significant research and development
investment and could result in AMS-Osram reassessing the future
of the new Kulim manufacturing plant in Malaysia.
"The micro-LED project cancellation puts the future of the
technology into question," Vontobel analyst Mark Diethelm said
in a note, adding that the project was one of the key elements
in the brokerage's investment thesis for the company.
The company said as a result of the cancellation, it expects
impairment charges of 600-900 million euros and around 30-50
million euros lower adjusted earnings before interest and taxes
(EBIT) for 2024.
(Reporting by Alexander Huebner and Bartosz Dabrowski, Editing
by Madeline Chambers)
((bartosz.dabrowski@thomsonreuters.com; +48 58 7696560;))