Apple Supplier Warns Of Missing Revenue Targets Over Declining Smartphone Demand, Shared Drop

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Today, the shares in AMS, an Austrian chipmaker, dropped by more than 13 percent after the iPhone supplier warned its investors regarding a slowdown in the smartphone industry.

The company revised down its revenue expectations for the current quarter to between $350 million (£270 million) and $390 million. It reflected the continued “subdued smartphone demand” across the globe.

In its reporting of its results for the three months to 31 December, AMS said that it would not be paying a dividend for 2018 after its profit dropped by more than half in the fourth quarter. The decline was blamed on the slowing demand from one of its major customer, and business restructuring costs.

The adjusted earnings before interest and tax of the company for the fourth quarter amounted to $61.9 million, with revenues amounting to $491 million.

The company provides Apple with optical sensors that are used for the facial recognition technology of the tech giant. Last month, Apple downgraded its revenue expectations for the previous quarter. It is its first warning in a period of 15 years, because of the global market conditions and fewer customers opting for an upgrade of their iPhones.

The results of the AMS come after various industry bedfellows posted revenue warnings this quarter, including Samsung and Taiwan Semiconductor.

AMS stated: “Reflecting a more volatile end market and macro-economic environment, AMS has decided to suspend its cash dividend policy for the fiscal year 2018 to focus on strengthening its business position in 2019.”

At a news conference that was held in Zurich, Alexander Everke, the Chief Executive of the company, stated: “Given a market, we are seeing that is very volatile and hard to read and also demand that is smaller than we had envisaged, we see first-quarter sales of $350-390 million.”

When asked regarding the earnings prospects during an investor call, Everke stated: “Certainly we see the second half of the year 2019 better than the first half.”  He did not provide details regarding the matter.