Shares in AMS AG lost a fifth of their value on Thursday after a sales warning from major customer Apple brought concerns over the challenges for the Austrian sensor specialist sharply into focus. AMS provides Apple with optical sensors for 3D facial recognition features on its newest smartphones, but analysts have highlighted increasing competitive pressure, a threat from new technologies and overcapacity issues facing the company.
Apple warned on Wednesday that sales in its holiday season quarter would be lower than expected, blaming slowing iPhone sales in China.
AMS, which had already cut its guidance for the fourth quarter in November, declined to comment on the Apple warning on Thursday.
The Swiss-listed group does not identify Apple as its customer, but analysts estimate it accounts for around 45 per cent of sales. AMS said in November that customers' demand pattern had become increasing volatile, making business more difficult to predict.
The stock traded at 18.835 Swiss francs in intraday trade, down 20 per cent. In March last year, investors paid more than 113 Swiss francs ($114) for the share.
The shares lost nearly 75 per cent in value last year, while the European sector index lost 11 per cent and Apple shares 9 per cent.
Zuercher Kantonalbank analysts said they do not expect Apple's first sales warning in nearly 12 years to trigger a new one from AMS.
However, competitors such as Sony, Infineon or STMicro could threat AMS's prospects with the development of new high end 3D sensing products.
"We see a risk that Apple moves to dual sourcing for the face ID - which currently is single sourced from AMS - in order not to rely on deliveries from just one supplier and also in order to have a favorable pricing power," said Hauck & Aufhaeuser analysts in a note to clients.
Industry experts also see overcapacity as an issue at AMS. The Austrian group has invested heavily in its manufacturing capacities in Singapore in recent years, but the utilisation rate has remained below expectations.
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