What Display Daily thinks: Well, Apple has created a lot of sad emojis in the display industry with its effective cancellation of plans to pursue MicroLED displays for its Apple Watch.
Ardent MicroLED cheerleader that I was, and could still be, is this more dirt on the grave of MicroLED or is it a mixed blessing?
A lot of the MicroLED industry is going to feel the pain because with no Apple there is no slide in the investment decks as companies raise cash and there is no pull from the market that is as big.
Or, is it about time that MicroLED startups grow up and start thinking for themselves. To use a quintessential Jon Peddie Research analogy, Nvidia had to sell its own graphics cards before it became the maker of the world’s AI processing engine. Board versus chip.
MicroLED’s ecosphere is mostly academic and research driven attempts to drive processes with a big swing at getting an Apple, Samsung or the like to sign up for the tech. ams Osram swung for the fences and got hurt. That’s going to scare the whatever out of investors and startups.
Maybe I will be too much of a contrarian to let go of my MicroLED enthusiasm, but I am also enough of a mercenary to see that the QD market is looking like it might be the best place to park your next gen display hat.
QD is not so much about the next bright shiny LED tech but about the bright shiny picture with whatever you’ve got. I feel sorry for OLED. Well, only in so far as anyone can feel sorry for inanimate, soulless light-emitting materials, if you get what I mean.
ams Osram Adjusts Strategy After Project Cancellation
Back in 2022, ams Osram, led by CEO Alexander Everke, announced plans to escalate its MicroLED production by 2024, emphasizing the technology as a core venture and a domain where the company holds a competitive edge. The initiative included the development of an innovative 8-inch production facility in Kulim, Malaysia, designed for fabricating LEDs on 200mm-diameter wafers. This strategic move garnered significant attention and a notable prepayment from a client, presumed to be a smartphone manufacturer aiming to deploy MicroLED displays in its products.
The Malaysian facility represented ams Osram’s ambition to serve a broad spectrum of application fields, extending from consumer electronics to the automotive and TV industries.
Fast forward to where we are now and ams Osram recently announced adjustments to its MicroLED strategy due to the unforeseen cancellation of a critical project. This development led the company to anticipate recording non-cash impairment charges ranging from EUR 600 million to EUR 900 million in the first quarter of fiscal year 2024. The decision necessitates a reevaluation of the use of assets associated with the MicroLED program, especially the new 8-inch LED facility in Kulim, Malaysia.
In light of these events, ams Osram has modified its mid-term revenue growth forecast. The company now expects a compounded annual growth rate (CAGR) of 6% to 8%, adjusting for the impacts of its non-core semiconductor portfolio and the early 2023 divestiture of the Lamps & Systems segment. This adjustment accounts for the revised projections for volume sales from the 8-inch LED facility.
For fiscal year 2024, ams Osram projects a reduction in adjusted EBIT by EUR 30 million to EUR 50 million, attributed mainly to decreased capitalization of R&D expenses and reduced government funding subsidies. Nevertheless, ams Osram plans to counterbalance these effects with further cost improvements on top of its ongoing Re-Establish-the-Base program.
Despite these revisions, ams Osram’s revenue guidance for the first quarter of 2024 remains steady at EUR 800 million to EUR 900 million, with an adjusted EBIT margin projected to be between 4% to 7%. The strategy update is expected to positively affect the company’s cash flow over the next 24 months, largely due to reduced capital expenditures.
This strategic pivot occurs while ams Osram continues to experience strong momentum in its core segments of automotive, industrial, and medical applications, supported by significant design wins. The company’s leadership in automotive semiconductor applications and potential in MicroLED and other growth areas remain key to its future expansion.
