Face recognition chipmaker AMS sees profit rise by 49% since new iPhone launches

AMS investors hope that new products launched in 2018 will lead to higher sales in 2019.

Austrian chipmaker AMS AG reported a 49 percent increase in its third-quarter core profit and gave an upbeat forecast for the next period, largely because Apple started mass production of new phones that include its sensors.

AMS is highly exposed to the smartphone and tablet markets and investors hope that new products launched in the second half of 2018 will lead to higher sales next year.

In particular, they hope for good sales of Apple’s three new iPhones, which analysts think all include AMS’s face recognition sensors. Analysts estimate that Apple accounts for around 40 percent of AMS sales.

iPhone XS and iPhone XR. Image: Apple

iPhone XS and iPhone XR. Image: Apple

AMS said third-quarter adjusted earnings before interest and tax (EBIT) reached $60.2 million or 13 percent of revenue from $40.5 million last year. The margin is expected to rise to 16 to 20 percent in the fourth quarter.

“This expected positive result reflects the ramp-up nature of the quarter given increasing production volumes for a recently launched global smartphone platform,” AMS said in a statement, adding it was making “very high volumes” for the programme.

AMS does not identify its customers, but this was believed to be a reference to Apple.

Revenues in the quarter reached $479.6 million (2017: $305.5 million) and are expected to rise to $570 to $610 million in the three months through December, AMS said.

The optimism is also based on the fact that it has started to produce 3D face recognition sensors for two Android customers, the Swiss-listed company said.

China’s Xiaomi, the world’s fourth-biggest smartphone maker, is one of them.

Credit Suisse analysts think that Huawei’s new Mate20 Pro phones also use AMS’s sensors for its face recognition feature, which would add the second-biggest smartphone maker to AMS’s customers list.

The group said it was working on sensors that are capable of scanning surroundings in 3D, so-called world-facing 3D sensors, for a major smartphone manufacturer. Analysts have suggested that Apple could be working on such a project to assert dominance in augmented reality.

AMS has been focussing on four businesses: optical sensors, such as the ones used in the new iPhones, image sensors for applications in self-driving cars, audio sensors such as microphones and environmental sensors, which detect temperature or moisture.

In the future, it will reduce its efforts in environmental sensing and instead strongly focus on “very attractive mid- and long-term growth opportunities in optical technologies,” the group said.

“This includes new areas of innovation such as photonic elements and photoacoustic structures.”

Details will be announced with fourth-quarter results.

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