February 6, 2018 / 11:02 AM / 6 months ago

UPDATE 2-Apple supplier AMS's profit leaps as mystery backer funds capex

* Q4 profit up tenfold to 141.1 mln euros

* Plans $600 mln 2018 capex with funding help from customer

* Expects first quarter revenue of $440-$490 mln

* Shares up 13 percent amid sea of red in equity markets (Adds CEO, CFO comments; details on capex backing from customer)

By Kirsti Knolle and John Revill

VIENNA/ZURICH, Feb 6 (Reuters) - Chipmaker AMS forecast a strong 2018 after reporting a more than tenfold increase in fourth-quarter profit, driven by increasing demand for sensors it makes for the latest Apple iPhones and other smartphone producers.

The Austrian company also said it expected to receive around $150 million from an unidentified customer to support a ramp up production, helping to send its shares as much as 13 percent higher in early Tuesday trading.

AMS supplies optical sensors that play a key role in facial recognition features that are one of the most distinctive features of Apple’s flagship iPhone X, which was introduced late last year and appears to have helped power AMS’s own results.

Apple accounted for about 40 percent of AMS’s sales in 2017, Baader analyst Guenther Hollfelder estimated, forecasting that percentage could reach around 60 percent in 2018.

AMS said fourth-quarter profit swelled to 141.1 million euros ($174.6 million) from 13.7 million euros a year earlier.

The company, which said it would report its results in U.S. dollars in the future, expects first-quarter revenue of $440-$490 million and an adjusted operating margin of 17-20 percent.

AMS said it was making progress diversifying beyond Apple, with new design wins with Asian smartphone makers and a major deal to supply 3D sensing for use in auto applications. It said it had won a large 3D sensing deal from a large Asia smartphone maker and was working on similar projects at other Asian firms.

Results are being driven not just by higher unit volumes for its chips in smartphones, but by the increasing amount of AMS semiconductor content within its customers’ products in markets for autos and industrial equipment, its chief executive said.

“We are less dependent on phone shipments as a number; we increase content significantly and on top of that we are getting more design wins in other customers, so this is clearly a very, very strong growth story,” Alexander Everke said.

CUSTOMER FUNDING CAPEX

AMS said it was undertaking a massive production ramp-up at its Singapore facilities, where it is making hefty capital spending (capex) investments and hiring around 8,000 employees to support its rapid growth in 3D image and optical sensing.

It said it planned to invest $600 million in capex during 2018. “In this context, AMS expects to receive funding from a third party for around 25 percent of these planned investments,” it said in a statement, without naming the investor.

“The partner you could read as a customer rather than a financial partner,” Chief Financial Officer Michael Wachsler-Markowitsch told an investor conference call.

Shares in AMS, which trade in Zurich, tripled in value last year, making them the best performer on the broad Stoxx600 index of European equities. Tuesday’s rise made it one of only a handful of gainers amid a global stock sell-off.

The company also said it had acquired Swiss facial recognition software maker KeyLemon for an undisclosed sum, the latest in a string of sensor-related technology deals.

AMS proposed to increase the 2017 dividend to 0.33 euros per share from 0.30 euros in 2016 and said it was considering a secondary listing in Hong Kong within 12 months.

Last week, it reported fourth-quarter revenue jumped 252 percent and raised its sales outlook.

$1 = 0.8082 euros Additonal reporting by John Revill in Zurich; Editing by Eric Auchard and Mark Potter

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