ams-Osram is now writing off up to 900 million euros for the flagship project, which should go into operation this year. The company spent 1.3 billion euros on the construction of the factory, some of the machines that have already been delivered and the development of the tiny light-emitting diodes, said CFO Rainer Irle. “We have been working on this for years and have made solid progress,” said CEO Kamper. “We thought everything was on track,” Irle added. “Now we have to see what we do with it.”
As part of the order cancellation, the company will “examine the future use of all assets included in the microLED strategy, particularly the new 8-inch LED factory in Kulim.” A new customer who could step in is not foreseeable. There is talk of selling the work. Some of the systems could perhaps still be dismantled, said Irle. The new board led by Aldo Kamper and CFO Rainer Irle sold the new factory to an investor for 450 million euros and rented it back to get money into the coffers.
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The project in Malaysia was initiated by former ams boss Alexander Everke. ams had grown strongly with Apple, but recently lost more and more orders from the US computer giant. The major customer’s rejection of MicroLED technology also reduces ams-Osram’s growth prospects: instead of the hoped-for medium-term sales growth in the core business of six to ten percent, only six to eight percent can be expected, it was said. Earnings before interest and taxes (EBIT) were missing 30 to 50 million euros because fewer research and development costs were capitalized and fewer subsidies were expected. ams-Osram is therefore examining further cost-cutting measures in addition to the ongoing cost program in order to compensate for the lost profit.
Kamper left it open whether Apple could have recourse. He could not provide any information about the content of the contract. Before the takeover of the German lighting company Osram, Apple was traditionally one of the largest customers of the Austrian ams. Even after some major orders were lost, the American company continues to do business. ams-Osram is examining additional savings beyond the current cost program in order to compensate for the loss of sales. The company announced this. The Regensburg location where the MicroLEDs were developed could also be affected. Kamper emphasized that loans were not at risk due to the write-offs: “We are still a healthy company with a strong balance sheet.”