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Home / Business / Face recognition chipmaker AMS has been facing delays in ordering from Apple

Face recognition chipmaker AMS has been facing delays in ordering from Apple



LONDON / VIENNA (Reuters) – The stock of Austrian chipmaker AMS lost 14 percent after technology giant Apple's supplier warned of further delays in completing product plans by a major customer, which weighed on the outlook for the second quarter.

FILE PHOTO: The logo of the multinational semiconductor manufacturer AMS (Austria Mikro Systeme) can be seen at an annual press conference on 6 February 201
8 in Zurich. REUTERS / Moritz Hager

Apple, for which the analysts are responsible For half of the AMS sales, the production of the iPhone X-line is set before new products come on the market in the fall. Although this transition was widely anticipated, the impact on AMS will be compounded by delays in the completion of part specifications by the US company.

AMS sensors are used by Apple to provide facial recognition capabilities that set the flagship iPhone X apart from competing smartphones, and the Austrian company is widely expected to win follow-up contracts for the next iPhones and iPads.

"As a result of these product transitions and product changes in a large consumer program that prevents pre-production of parts, AMS also expects significant under-capacity utilization," the company said.

It had reported late Monday that sales in the first quarter were heading towards the lower end of the previous forecast and warning ahead of the current quarter.

The chip maker's shares suffered their largest daily decline in two years on Tuesday before a partial recovery began after AMS executives told investors that the second half of the year would see results pick up again as soon as the main customer made new product specifications accepted.

At 1139 GMT, Zurich-listed AMS shares were up 9.1 percent at 86.90 Swiss francs, with other Apple vendors also affected.

Dialog Semiconductor, which supplies power management chips to Apple, fell 5.4 percent, while STMicro, another Apple sensor chip provider, fell in early trading by as much as 4 percent before losing 1 percent gave way.

FILE PHOTO: An iPhone X is seen on a big screen at the Apple Visitor Center in Cupertino, California, USA, on November 17, 2017. REUTERS / Elijah Nouvelage / File photo

MARGINS BLOW

AMS said Second-quarter revenue should drop to between $ 220 million and $ 250 million, or about half of the $ 452.7 million in the first three months of the year Year 2018 corresponds.

The reduced capacity utilization at its largest plant in Singapore will hit profit margins.

AMS also confirmed its medium-term growth and profitability targets, targeting an annual growth rate of 60 percent between 2016 and 2019, combined with an adjusted margin target of 30 percent from 2019.

Company executives stressed that there were no plans for dismissal of factory employees as the main customer continues to use AMS products. Order backlog is expected to reverse in the second half of 2018 as the customer steps in to buy.

"The imminent end of life for iPhone X is leading to a lower bottom than the most cautious estimates," said Barclay analyst Andrew Gardiner in a research note for clients.

Barclays expects the chip manufacturer's 3D sensors to increase to 1.6 billion euros ($ 1.95 billion) in 2018 in the second half of 2018 and Asian smartphone manufacturers next year to rise to 2.2 billion euros in 2019.

The company, which also produces sensors for cars and industrial gearboxes, expects a broader customer base for its 3D optical sensor products in 2019.

Potential new customers were not identified, but analysts said they could include China's Huawei [HWT.UL] Xiaomi or Korea's Samsung Electronics.

coverage by Eric Nachard in London and Francois Murphy in Vienna; Additional reporting by John Revill in Zurich; Editing by David Goodman


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