AMS-Osram shares set for biggest ever fall after microLED project cancelled
AMS-Osram shares are experiencing their biggest fall in company history after the cancellation of a microLED project, which could impact the company's future and its new manufacturing plant in Malaysia. The cancellation is expected to result in impairment charges and lower adjusted earnings before interest and taxes.
Feb 29 (Reuters) - Zurich-listed shares in AMS-Osram (AMS.S) were set for their biggest fall in company history on Thursday after the Austrian chipmaker said it would re-assess the strategy for its microLED technology that analysts say could be used in Apple watches.
The stock was trading 39% lower at 0920 GMT after AMS-Osram said a customer cancelled the project.
“Discussions with the customer are ongoing,” AMS-Osram said. It declined to disclose the name of the customer.
J.P. Morgan said in a note the cancellation, possibly related to Apple (AAPL.O) , would have a substantial impact on the company given the very significant research and development investment and could result in AMS-Osram reassessing the future of the new Kulim manufacturing plant in Malaysia.
“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 600-900 million euros and around 30-50 million euros lower adjusted earnings before interest and taxes (EBIT) for 2024.