Nov 16, 2018 08:18 AM IST
The Austrian AMS, which makes facial recognition technology, has become the latest Apple supplier that has reduced its revenue forecast, adding growing evidence that the latest iPhones are not selling well.
The Swiss group cut its revenue forecast for the fourth quarter by 15 percent and pushed its mid-term goals, hiding "recent changes in demand from a big buyer."
AMS, specialized in sensors, did not call Apple as a buyer, but analysts estimate that the American giant makes up 40 percent of sales for the Austrian group.
Two weeks ago, Apple shocked investors with a sales forecast for the Christmas quarter than expected, which led to suppliers, including the US firm Lumentum, the British company IKE and the Japan Displai display maker, which warned of the weakness in the sale of new iPhone.
Like Lumentum, AMS delivers Apple software needed for its FaceID technology.
An Anglo-German chip designer, Dialog Semiconductor, who hit a deal with a US $ 600 million deal last month, confirmed a negative trend when it was said on Wednesday that it did not see the decline in Apple demand.
The dialogue justified this by pointing out that it supplies much more products than the latest iPhones.
Over the past year, investors were largely willing to overlook the sale of stagnant iPhone units, as average sales prices continued to grow. But Apple is now facing fierce competition from a mid-price phone from a manufacturer like Ksiaomi Corp.
California-based company has begun selling its latest generation phones, the iPhone KSS and KSS Mak in September and the KSR model last month.
The new AMS guidelines that proposed between 11 and 18 million less iPhones would be produced in the fourth quarter of the estimated 77-82 million originally estimated, according to Credit Suisse analysts in a customer note.
"This is largely in line to read from Lumentum's recent warning," they said, adding that the management of Lumentum would have an impact of 15-20 million iPhones.
AMS shares reached 6.4 percent to 29.65 Swiss francs after a sharp drop in early trade.
They lost almost 30 percent of Apple's newest earnings, and since the beginning of the year they are 70 percent, and some investors see the possibility of buying, dealers say.
AMS expects revenue between three months and December 31 to be between $ 480 and $ 520 million, compared with $ 570 to $ 610 million forecast last month.
The adapted operating margin for the quarter is expected to become a percentage of low to medium teenagers after the previous guidelines for a margin increase of 16-20 percent.
AMS has also abandoned the target since 2019 for more than $ 2.7 billion, saying it is now expecting an annual double-digit revenue growth for the coming years.
It still has a targeted operating margin of 30%, but no longer provides a specific time frame. It has already postponed the target by 2020 from 2019 in July, at a time due to delays from the main buyer.
"These guys no longer have visibility," said Mark Tailor, senior trader at Mirabaud Securities Global Thematic Group.
AMS, which has invested heavily in research and development and expansion of production, is now trying to tackle insufficiently utilized facilities, increasing competition and relying on Apple.
Although the number of analysts has recently diminished its recommendations, many target price recommendations are still above 40 Swiss francs. "I would not be surprised to see (actions)," said Tailor.