Sensor Maker AMS Warns of Slowdown During Second Quarter

On Monday, chip and sensor maker AMS posted sales for the first quarter that were close to the lower end of guidance it released earlier and warned a downturn would take place after receiving weaker orders from a large customer.

The customer’s name was not released by AMS, but the company, which is based in Austria, is a large supplier for Apple, making different components for the tech giant’s flagship iPhone.

Mortiz Gmeiner the investor relations head at AMS said the company was not allowed to discuss the customer, but AMS has seen significantly lower business from a large business of smartphones and that has and continues to have a big impact on the company’s consumer side and its overall performance as a whole.

AMS said that for the second quarter sales were expected to fall to $220 million to $250 million, which is down from first quarter sales for this year of $452.6 million

The drop was based upon smaller orders and lower forecasts for orders for the month going forward, said the head of investor relations.

AMS said that changing in its upcoming products, which prevent pre-production of parts means that it also is expecting less utilization of plant capacity, which will hurt profit margins.

The company, which makes sensor for industrial gear and cars, said that the problem would only be temporary and that making preparations for ramping production up during the second six months of the year were on track.

The company also has confirmed mid-term guidance for both growth as well as profitability, with a goal of 60% compound annual growth from 2016 through 2019, combined with a margin for adjusted EBIT of 30% starting in 2019 and moving forward.

Net profit for the first quarter increased to end at $99.9 million compared to a loss one year ago for the same period of $19.9 million.

Shares of AMS have increased by 8.1% during 2018, outpacing the Stoxx 600 Tech Index that has increased by just 0.7%.

The stock has been struggling of late due to fears that Apple is leaning toward using its own chips instead of using third parties to buy them from.

Weak results by Taiwan Semiconductor this month have also spread worry about a softer demand for smartphones

Analysts say AMS obtains approximately 35% of all revenue from Apple, with components for mobile phones representing the overwhelming majority of its business with the tech company.

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