As new ams Osram CEO Aldo Kamper continues to chart a recovery for the company, one business sector is currently standing out as key to the revival: automotive LEDs.
Since Kamper took the helm in April, the Premstaetten, Austria–based outfit has announced at least three different automotive-related LEDs that between them serve multiple functions, including headlights, taillights, and interior lighting.
Those products contributed to the lone revenue gain in the company’s semiconductor stable for the recently reported third quarter, when automotive LED sales inched up 2% over the third quarter of 2022.
While a 2% improvement hardly qualifies as stunning growth, it is a notable achievement within an organization that has not reported a company-wide revenue gain for two years.
“Our automotive LED products were in high demand, especially in China with an increasingly short order pattern,” Kamper told analysts on a web call to discuss third-quarter results, when corporate revenues fell 25% to €904 million from €1.21 billion in the same period a year ago, and net income tumbled 40% to €29 million from €47 million.
The company clearly expects automotive’s relative liveliness to continue. In a press release announcing the third-quarter results, it reaffirmed its mid-term compound annual growth forecast through 2026 of 6 to 10% and an EBIT margin of around 15% “on the back of strong automotive design wins.”
Eviyos, Osire, and Aliyos
The design wins include the new products: Eviyos pixelated headlights, the Osire E3731i intelligent RGB interior lights, and the thin Aliyos “LED on foil” mini LEDs for taillights, interactive exterior lights, and interior use.
“The mid-term target financial model assumes the largest growth contribution coming from the strong momentum in [our] target automotive semiconductor applications,” ams Osram noted in the release.
CEO Kamper elaborated further on the prospects.
“Eviyos has a lot of good traction, and we see more and more car models coming on line with this technology next year,” he said during the call with financial analysts, noting that the first example will be the Volkswagen Touareg. “Also the strong momentum on the iRGB [multicolor LED] is surprisingly strong. We see a lot of these new platforms where people put more functionality in the interior lighting. It’s not just ambient lighting anymore. It [also] starts to serve a function. And with that the amount of LEDs is much higher. And this is really driven by all the new EV platforms especially from China that are increasingly using this functionality, and are putting the other carmakers under pressure to do something similar. We […] expect significant uptake in the second half of next year.”
How can that happen?
One analyst questioned the LED growth prospects when, as the analyst noted, carmakers themselves face a flat market. Kamper explained the increase will come from automakers building in new lighting features, rather than from any spike up in car sales.
“We share the view that there will be little volume growth next year,” Kamper agreed, referring to sales of automobiles. “The majority of our growth clearly comes from our new product introductions. We’re looking at a quite solid ’24.”
The company said it has secured €250 million of design wins for Eviyos over the next five years and €100 million for its iRGB line. It did not provide a figure for Aliyos, the newest of the three products.
The non-automotive portions of ams Osram’s semiconductor group did not fare well in the third quarter, as sales in both Industrial & Medical and Consumer (mobile phones) declined from the third quarter of 2022. The declines included a downturn in LEDs for streetlights and horticulture, among others. In the third quarter, revenues for the semiconductor group fell 20% to €648 million from €813 million. Automotive was up 2% at €260 million, Industrial & Medical fell 26% to €202 million, and Consumer fell 35% to €186 million.
Ams Osram’s semiconductor operations include LEDs, lasers, and sensors. Kamper is overseeing a multifaceted recovery plan that includes sweeping financing measures (a factory sale is among them; see link to third-quarter 2023 results story above), corporate restructuring, and the sell-off of about €300 million to €400 million of some semiconductor operations including passive components.
In the mid-term, the recovery will be led by automotive LEDs, “followed by mobile light sensors on the back of the large design wins that the company secured earlier and, thirdly, volume sales from [our] 8-inch facility in Kulim, Malaysia, besides the other growth drivers in industrial, medical, and selected consumer applications,” ams Osram said.
The Kulim site will make micro LEDs that will be vital to revenue in the mid and long term. Analysts are keeping a close eye on that plant.
Outside of its semiconductor group, ams Osram also sells replacement lamps into the automotive sector, via its Lamps & Systems group which declined in the third quarter to €256 million from €280 million in 2022’s third quarter, not counting disposals. L&S also includes lamps for industrial and entertainment settings. In the mid-term, ams Osram forecasts 0 to 2% growth for L&S, and 9 to 13% growth for semiconductors, for the combined mid-term forecast of 6 to 10% CAGR.
The company said it is putting some of its recent government subsidies toward bottom line improvement, while putting other portions toward capital expenditure and research.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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