Ams Osram to re-assess microLED strategy
Cancellation of key microLED project, triggers re-think of asset use including new 8-inch LED facility
Ams Osram has revisesd its microLED strategy following the unexpected cancellation of cornerstone project believed to be with Apple around the microLED version of the Apple Watch.
Ams Osram company says it will need to revisit the future use of its assets related to its microLED strategy, particularly the new 8-inch LED facility in Kulim in Malaysia, which was part of €1 billion investment started in 2022.
Based on a preliminary estimation, Ams Osram expects to record non-cash impairment charges on microLED related assets and goodwill of €600 to 900 million in the first quarter of fiscal year 2024.
It also expects a slightly revised mid-term revenue CAGR of 6-8 percent on a like-for-like basis, as volume sales from its 8-inch LED facility in Kulim can no longer be assumed in that time frame. It will also see a positive impact to its cash-flow profile within the next 24 months.
Changes to the capitalisation of R&D investments into microLED and reduced subsidies from public funding schemes will impact the operational profitability (adjusted EBIT) for FY2024 by around €30 to 50 million. The company considers additional cost improvements on top of its known ‘Re-Establish-the-Base’ program to further balance this negative impact on Fiscal Year profitability.
Ams Osram says, however, that the underlying business performance is on track and the company continues to expect first quarter revenues to improve year-over-year on a comparable basis to a level of €800 - 900 million. The adjusted EBIT is expected to still come in between 4 percent to 7 percent of revenues but will be burdened by the changes to capitalisation of R&D and reduced subsidies within that range.
The company says it continues to expect that the largest growth contribution will be coming from the strong momentum in its target automotive semiconductor applications, where it is market leader, followed by mobile light sensors on the back of the large design-wins that the company secured earlier besides the other growth drivers in industrial, medical, and selected consumer applications.
