Ams Osram quarter slides amid ongoing supply chain headaches

Feb. 9, 2022
It didn’t help that the company seems to have lost a certain large customer of smartphone sensors. But there’s a future for LEDs in horticulture, UV-C, AR, and VR, CEO Everke says.

The ongoing supply chain crunch and the apparent loss of customer Apple hacked away at ams Osram in the fourth quarter, as sales and income tumbled 13% and 21%, respectively, compared to the year-earlier quarter. The decline came even though the quarter included sales of Osram, which was not on the 2020 books.

But CEO Alexander Everke is optimistic of a longer term uplift and told analysts that a growing market for optical chips — including LEDs in horticulture, UV-C, AR/VR, medical and other areas — will ensure growth.

A strong immediate upswing does not seem likely, as Everke noted that supply chain issues will persist. That includes impacts on the automotive sector, where car manufacturers are delaying orders of new chips as they themselves contend with supply difficulties.

Premstaetten, Austria-based ams reports for the time being in US dollars. It plans to switch to euros when it announces first-quarter 2022 performance in three months.

For the fourth quarter ended Dec. 31, revenue fell to $1.4 billion from $1.6 billion a year ago. Net income in the period was $136 million versus last year’s $173 million. The 2021 quarter included Osram results; the 2020 did not. Ams acquired Osram in July 2020 but did not integrate Osram numbers until March 2021.

Before acquiring Osram, ams’ portfolio included sensors and laser chips. In picking up Munich-based Osram, a company that was roughly four times its revenue size prior to the acquisition, ams is expanding the stable to include LEDs. It has been shedding many parts of Osram that make finished illumination and IoT systems, most recently selling horticultural lighting specialist Fluence by Osram, to Signify.

CFO Ingo Bank noted that the quarterly revenue contribution by the consumer sector was “lower due to decreased market share”.

While ams Osram has indeed held fast to the chip-level strategy, it has had to endure ups and downs in that business. In one blow, the company is believed to have lost its largest customer, Apple, to which it supplied sensors for iPhone facial recognition and other functions.

On an earnings web call this week, Everke and chief financial officer Ingo Bank would not comment on specific customers. But a slide presentation noted that the quarterly revenue contribution by the consumer sector was “lower due to decreased market share,” which would appear to be a euphemistic reference to the loss of Apple over the last year.

It wasn’t just the loss of Apple that hit ams.

Market imbalances have persisted through the second half of 2021, particularly in the automotive market, and created revenue delays in automotive supply chains as a result of reductions in OEM production,” Everke said. “From todays point of view, we expect this situation to continue to influence our market for a considerable period this year. Meanwhile, we are ensuring capacity availability on our side and are ready to serve recovering customer demand once the supply chain and production volatilities start to subside. Supply chain imbalances also affected certain areas of our consumer business last year.”

Ams Osram is in the midst of reassigning factory space, with its Kulim, Malaysia and Premstaetten sites possibly secure and others not. Everke and Bank reiterated on this week’s call that they would have more to say on that subject on April 5, when ams is hosting a Capital Markets Day.

For the year, the financial results were healthier, as ams Osram reported a 44% jump in revenue to $5.8 billion from $4 billion, and a 15% increase in income to $313 million from $273 million. Supply chain issues began to take effect in the third quarter.

Everke and Bank both provided a look at the LED areas that will help drive future growth. LEDs Magazine will report on that outlook in a separate article.

MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

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About the Author

Mark Halper | Contributing Editor, LEDs Magazine, and Business/Energy/Technology Journalist

Mark Halper is a freelance business, technology, and science journalist who covers everything from media moguls to subatomic particles. Halper has written from locations around the world for TIME Magazine, Fortune, Forbes, the New York Times, the Financial Times, the Guardian, CBS, Wired, and many others. A US citizen living in Britain, he cut his journalism teeth cutting and pasting copy for an English-language daily newspaper in Mexico City. Halper has a BA in history from Cornell University.