AMS's Outlook Spurs Fears of Weak iPhone X Demand

AMS's Outlook Spurs Fears of Weak iPhone X Demand
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Apple supplier AMS shares tumbled after cautioning on negative operating margins, yet another semiconductor company to spark warnings from analysts of shaky demand for the iPhone X, according to Bloomberg.

The poor short-term guidance given by Austrian-based AMS was heavily impacted by lower iPhone X volumes, Baader Helvea analyst Guenther Hollfelder said in a note. AMS shares fell as much as 14 percent Tuesday in Zurich, where the stock is listed. The stock has increased 8.1 percent so far this year, as of the end of trading Monday. The company expects second-quarter revenue of $220 million to 250 million, up 10 to 25 percent year-on-year and below estimates of 304.9 million euros.

AMS produces optical sensors for mobile phones, which manage color, brightness, and whether the handset is being held against the ear, and has recently expanded into 3-D sensors. Its second-quarter sales guidance “corresponds with about 20-25 million less iPhone X units based on our calculations,“ Hollfelder said.

Investors have been looking for clues regarding demand for the new iPhone X. Apple’s five largest device assemblers reported a sharp slowdown in monthly sales after peaking at the end of last year, suggesting demand for the high-end device may be fading.

Key suppliers such as Hon Hai and Pegatron reported a combined 8 percent rise in their total sales across the March quarter, but growth slowed sharply later in the period. Apple’s main chip supplier TSMC predicted current-quarter sales about $1 billion less than analysts had projected.

AMS’s first quarter adjusted earnings came in at $77.3 million, below estimates of $82.9 million. Adjusted operating margin in the second quarter is expected to be around negative 20 to 25 percent, compared to a positive 17 percent in the first quarter.