Chipmaker AMS signals steady Apple orders, Android share grows

April 30, 2019

By Kirsti Knolle

VIENNA (Reuters) – Apple supplier AMS on Tuesday was upbeat on the current quarter and the rest of the year, pointing to steady orders for optical sensors from its major customer and a growing share of income from Android smartphone makers.

The Swiss-listed company’s optimism echoed a positive tone from Samsung, which has also said it expects a pick-up in memory chip and smartphone sales.

Other chipmakers have been more cautious on the outlook, including Intel, Texas Instruments, and Infineon.

AMS’s shares rose as much as 22 percent in a relief rally, taking them back to where they were before the company’s revenue forecast cut in November.

“It’s the good news of a strong outlook for the second quarter sales versus expectations,” said Martin Moeller, equity portfolio manager at Swiss private bank UBP. “Also, investors have been nervous about oversupply and high inventories in semiconductors, especially after the recent Intel forecast cut.”


Chief Executive Alexander Everke said: “We see a more stabilized consumer demand and smartphone demand.”

When asked whether its “major customer” – a reference to Apple – has become more predictable after difficulties surrounding the launch of the latest iPhones last year, Everke said on a conference call: “We feel very comfortable with a view of a strong second half of this year.”

AMS supplies the Californian tech group with face recognition technology but has been working on diversifying in the face of slow demand for new phones.

The CEO said recent order wins from Android smartphone makers had started to materialize and would “increasingly do so in the second quarter and to the rest of the year.”

AMS’s Android customers include Samsung as well as China’s Xiaomi and Huawei, also among the biggest smartphone makers worldwide.

Chipmakers get a large portion of their revenue from China and trade negotiations between Washington and Beijing have caused concern in recent months.

AMS expects second-quarter revenue of $390-430 million and an operating margin of around 10 percent.

Revenue in the three months through March fell 20 percent from the fourth quarter of 2018 to $390.2 million, at the upper end of its guidance. The operating margin came in at 6 percent, with adjusted earnings before interest and tax (EBIT) at $23.5 million.

AMS also cut costs in the first quarter, partly because it cut staff and increased the utilization rate at its Singapore plant.

Operating cash flow in the first quarter was $96.1 million, nearly twice as much as a year earlier.

(Reporting by Kirsti Knolle, additional reporting by Helen Reid and Josephine Mason in LONDON; editing by Michael Shields/Jason Neely/Jane Merriman)

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