Chipmaker AMS posts second-quarter operating loss but spreads optimism for rest of year

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VIENNA (Reuters) – Austrian chipmaker AMS on Monday reported a second-quarter operating loss due to an already communicated orders delay from a key customer but said new orders have come in, securing strong growth in the second half of the year.

AMS, which provides Apple with sensors for its face-recognition feature at its iPhone X, posted an operating loss of $48.6 million for the three months to end-June after a profit of $1.6 million the year before.

Revenue came in at $252.8 million, slightly above the upper end of its guidance from April. Back then, the Swiss-quoted firm had to lower its second-quarter outlook due to a “major customer’s” delay in finalizing product plans, forcing it to wait and let capacity go unused.

Apple, which contributes an estimated 40 percent of AMS revenue, reportedly asked suppliers to make about 20 percent fewer components for the three new iPhones it plans to launch in the second half of 2018.

Analysts describe AMS’s current role in the iPhone as an important niche role and think it could become one of the biggest beneficiaries of so-called “augmented reality” applications, of which Face ID is just one form.

“In line with previous expectations, we see strong sequential revenue and profitability growth in the third quarter as high volume ramp-ups in consumer optical sensing have started,” AMS said in its second-quarter report.

It forecast “steep sequential growth” with revenues of $450 to $490 million in the third quarter and “a record level of revenues” for the second half of 2018.

“The adjusted operating margin for the third quarter … is expected to show a significant sequential increase to a low teens percentage, predominantly resulting from the ongoing improvement in capacity utilization,” it said.

DIVERSIFY

To secure growth, AMS aims to diversify and establish an Android customer base. It agreed a first such deal with China’s smartphone maker Xiaomi earlier this month.

The Austrian firm will provide Xiaomi’s face recognition system with semiconductor laser diodes, so called VCSEL arrays, ambient light sensors and a proximity detection module for its Mi8 and Mi8SE models.

To strengthen its external VCSEL supply chain, it will cooperate with Taiwan-based VCSEL vendor HLJ Technology, AMS said. HLJ said it will establish a dedicated chip process manufacturing line for AMS at HLJ Taiwan.

AMS, whose industrial unit also develops image sensors that help map roads for self-driving cars, said it was engaging with a “global pioneer in autonomous driving platforms” and saw solid interest from other industry players for in-cabin monitoring solutions.

Reporting by Kirsti Knolle; Editing by Andrew Bolton

Our Standards:The Thomson Reuters Trust Principles.

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