ams Osram plans €800 million LED plant development in Malaysia

12 Apr 2022

Company is refocusing on optical technology – and aims to exceed 20% pre-tax margin in 2022.

In a statement earlier this month, during its Capital Markets Day (“CMD”), ams Osram outlined its “path to leadership in optical solutions” with the aim of driving significant value generation and achieving a more than 20% pre-tax margin target this year.

After one year of operational control of Osram, since the March 2021 acquisition, the amalgamated firm presented its strategy to “become the leader in optical solutions and outlining the key drivers to create sustained long-term value”.

The company is also planning additional investment in a significant new 8in LED front-end capacity in Malaysia (at the Kulim Hi-Tech Park to support advanced LED technologies and microLED manufacturing totaling €800 million. Further to that, ams Osram is also planning to be carbon neutral by 2030.

During the CMD on April 5th, Alexander Everke, CEO of ams Osram, said, “We are excited to walk investors and stakeholders through our achievements so far and share our enthusiasm for the group’s future. We have a compelling strategy, anchored by major technologies, that will drive the demand for optical solutions in markets in which we are active and holding leading positions.

Everke continued, “We [offer] an optical solutions portfolio with innovative solutions to our customers. This is underpinned by the diversity of our revenue growth vectors in our Semiconductors business, and across the Automotive, Consumer, Industrial and Medical end markets. The confluence of these factors will create the foundations of sustainable and responsible success.”

The CMD was presented by the entire Management Board of ams Osram, alongside senior members of the broader management team. The CMD focused on the following:

• Presenting how the group’s business and integration have evolved since March 2021;
• Confirming the group’s targeted financial model, providing more underpinning regarding the key drivers of the long-term target model of double-digit average annual revenue growth and 20+% adjusted EBIT margin.
• Introducing 2024 mid-term targets of €4.9 billion +/- €300 million revenues and adjusted EBIT margin of 15% or better, on the basis of the re-aligned portfolio;
• Detailing the key drivers, across growth vectors, in the group’s portfolio serving the major market trends of Digitization, Smart Living, and Energy Efficiency & Sustainability;
• Showcasing the group’s strong technology position in key growth applications including advanced dynamic automotive lighting, microLED display technology, optical solutions for AR/VR, automotive sensing, and horticulture LED lighting, among others;

New LED facility

Besides a range of footprint consolidation steps, ams Osram will build a new 8in LED front-end facility alongside its existing LED fab in Kulim, Malaysia, adding significant capacity to support expected growth in advanced LED technologies and MicroLED. The new facility investment is expected to amount to up to around €800 million over the next 18-24 months.

The company says it has already made significant progress since March 2021 with a range of key milestones achieved, demonstrating the commitment to become the leader in optical solutions. A unified amsOsram team approach has already translated into a solid financial performance despite end market and supply chain headwinds over the last 12 months, the company stated at the CMD.

At the same time, ams Osram says it is “progressing well in divesting non-core businesses through the sale of the majority of the former Osram Digital business”, which is expected to be completed by year-end 2022, and the completed unwinding of the former Osram-Continental joint venture.

As part of the definition of the group’s ESG strategy, ams Osram published its first key targets: to be carbon neutral by 2030 and to have 25% of company leadership positions held by women by 2026.