AMS-Osram shares tumble almost 40% after microLED project axed (updated)
29/02/2024 14:07
(Recasts, adds CEO, CFO quotes in paragraphs 2, 4, 5)
By Alexander Hübner and Bartosz Dabrowski
Feb 29 (Reuters) - Shares in AMS-Osram AMS.S fell
almost 40% and were set for their biggest ever daily drop on
Thursday after a client, which analysts said could be Apple,
cancelled a microLED technology project.
"The shock is still deep," the Austrian chipmaker's Chief
Executive Aldo Kamper told a conference call, after a customer,
whose identity AMS declined to disclose cancelled a key project
for the pixel-sized LEDs which can be used in smartwatch
displays.
Its Zurich-listed shares were trading 37% lower at 1400 GMT.
Kamper said AMS Osram will now have to reassess the future
of a new factory for eight-inch silicon wafers, built
specifically for this purpose in Kulim, Malaysia for 1.3 billion
euros ($1.41 billion).
"We thought everything was on track," Chief Financial
Officer Rainer Irle said, adding that the sale of the factory
was under discussion.
JP Morgan said in a note that the cancellation, possibly
related to Apple, would have a substantial impact on the company
given the very significant research and development investment.
Apple AAPL.O did not immediately respond to a request for
comment.
"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 million-900 million euros and around
30 million-50 million euros lower adjusted earnings before
interest and taxes (EBIT) for 2024.
(Reporting by Alexander Huebner and Bartosz Dabrowski, Editing
by Madeline Chambers and Matthias Williams, Kirsten Donovan)
((bartosz.dabrowski@thomsonreuters.com; +48 58 7696560;))