Austrian sensor and LED maker ams Osram looks set to expand two factories — one in Malaysia and another in Austria — possibly at the expense of other plants, according to comments that top brass made during a conference call with analysts yesterday.
CEO Alexander Everke and chief financial officer Ingo Bank both shed some light on intentions that the company first stated last May to seek “optimization opportunities” across manufacturing plants in Austria, Germany, Malaysia, China, Singapore, and the Philippines. On the same call, they also alluded to continuing divestiture of digital lighting operations.
“We are taking the first steps related to our manufacturing setup, and are planning an expansion of capacity in Malaysia and Austria,” Everke said on yesterday’s analysts’ call to discuss third-quarter results, in which sales rose by 6% and profits were flat.
The Malaysian plant that will benefit is the one in Kulim, which Osram opened as a state-of-the-art LED facility in 2017, near an existing plant in Penang, well before Premstaetten-based ams acquired Osram in July 2020. The future of the Kulim site has been subject to speculation. But it and a factory in ams’ hometown of Premstaetten will benefit from capital expenditures.
“These plants will be part of our capex spending target to support future capacity needs in different shades of technology,” Everke said. “We are currently preparing a full concept of our re-aligned manufacturing footprint and expect to provide further updates in spring next year.”
The company is planning a Capital Markets Day for around April.
When pressed by one analyst for more information yesterday, Everke elaborated that “we made a decision to further invest in Kulim in Malaysia and also in our fab in Premstaetten, for different types of technology. In Austria it’s more related to CMOS manufacturing, in Kulim obviously for LED manufacturing and future technologies.”
Everke declined to reveal what the “future technologies” might be, other than to say, “The additional investment in Kulim to expand capacity is a growth priority for us as a company, going into more sophisticated and higher-technology LED capabilities in the next years to come.” He referred to those unspecified LED technologies as “a very important market for us.”
Micro LEDs
Responding to a separate question, Everke emphasized the importance of micro LEDs to ams Osram’s future, but he did not specifically tie Kulim to the technology.
“Micro LED is one of our key initiatives,” he said. “Future investment will come. But clearly the market is a few years away. It won’t happen next year, but this is such a superior and complex technology that we’ll invest to make sure we stay ahead of the curve and position ourselves as the clear leader.”
With Premstaetten and Kulim set for growth, Everke hinted at paring back other plants, noting that the company’s “industrial footprint” is still under review.
“We will be able to communicate at the beginning of next year,” he said, noting that by then ams will have made more progress at integrating Osram, which includes jettisoning non-core activities, eliminating redundant operations, and investing in growth areas.
“It’s one reason to invest further in Kulim — the utilization is actually quite high, driven by the LED demand for automotive manufacturing,” he said.
CFO Bank provided a similar take on the company’s factory plans.
“We are enhancing the footprint we have in Malaysia,” he said. “Expanding on what is already there is absolutely required. And we are currently putting together the exact plans. And the same is true for what we’re planning to do in Premstaetten.” He said the company will reveal more at the Capital Markets Day.
After the call with analysts, LEDs Magazine contacted ams Osram to ask if the company plans to shut down other plants.
“We are not discussing individual manufacturing locations or production infrastructure in detail,” a spokesperson responded. “Overall, we see good utilization in our manufacturing and where needed we have taken steps to adapt our manufacturing setup for short-term effects. We will provide a detailed update on our long-term manufacturing strategy in the context of the announced CMD (Capital Markets Day) in April 2022.”
More divestitures
Meanwhile, the company gave a vague update on its continuing efforts to sell off non-core operations such as digital lighting, mainly to indicate that more divestitures are coming.
Sell-offs to date have included Digital Lumens, the North American chunk of the Digital Systems group, and a Bulgarian lighting components factory.
Ams Osram for now still retains what it described for LEDs as the “Eurasian” part of Digital Systems, which makes LED drivers, LED light engines, ballasts, and components for connected lighting.
It also still owns Fluence by Osram, the Austin, Texas-based horticultural lighting company. In non-connected lighting, architectural and façade lighting specialist Traxon Technologies is still part of the stable.
“As mentioned previously, there are elements of the DI (digital) portfolio which are not core to the ams Osram business,” a spokesperson told LEDs. “If relevant, updates will be made accordingly.”
We asked how sales of ultraviolet C-band (UV-C) disinfection products are going. The lighting industry has positioned UV-C as a means to improve workplace and home hygiene, including zapping the SARS-CoV-2 virus that causes COVID-19, but general market uptake appears to be below expectations.
“We see UV-C LED disinfection as a longer-term growth driver,” the spokesperson replied. Ams Osram owns a stake in Livermore, CA-based UV-C LED company Bolb.
Investigation
As part of its third-quarter results announcement, ams Osram revealed that its former CFO Michael Wachsler is under investigation by Austrian authorities for matters related to “private securities transactions allegedly assigned to Mr. Wachsler and two former employees of ams.”
The company said that, as a result, it has stopped using Wachsler’s advisory services.
“The company itself is not a subject of this investigation or related allegations,” ams Osram said. “Ams Osram is fully cooperating with the relevant authorities and has initiated an internal investigation into the matter. Ams Osram is not able to comment further on ongoing investigations.”
CEO Everke told analysts that the “we and I myself have been very surprised by this development.”
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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