EUR 850.00 For Business Accounts Only

Morningstar | AMS’ Design Wins Positive but Market Remains Very Uncertain

AMS is a leader in designing and manufacturing sensor solutions and analog integrated circuits for the consumer, automotive, medical and industrial end markets. We think AMS’ substantial portfolio positions the firm to benefit from increased sensor content in smartphones due to the demand for 3-D sensing and augmented reality. 3-D Sense should drive substantial revenue growth over the near term but will also come with significant customer concentration risk, given the company's business relationship with Apple. While unlikely, the loss of Apple as a customer would be devastating to AMS' value.We expect optical sensors will be the primary near-term growth driver for the company. Recent acquisitions of Heptagon, a leader in optical sensor solutions, and Princeton Optronics, a maker of vertical cavity surface-emitting lasers, or VCSELs, have given AMS a unique portfolio. Both technologies should allow AMS to produce 3-D sensing applications for smartphones, tablets and, eventually, wearables. Apple is an early adopter of such technologies and has monopolized a major portion of the existing supply of these sensors, paving the way for tremendous near-term revenue and earnings growth for AMS.While the consumer market is currently the larger segment for AMS, we also see nice opportunities in the industrial, medical, and automotive end markets. We are encouraged by the firm’s growth prospects here as well as the superior gross margins that these end markets command. In industrial, we believe the firm’s optical portfolio will have a major part to play in applications between automation and robotics.In automotive, we think there are opportunities related to position sensing as well as LIDAR applications. AMS is also currently one of the few industry players capable of producing functional multi-sensor solutions in individual packages or sensor hubs. In the medical end market, we believe the company is well positioned to capitalize on market segments emerging in computed tomography and other diagnostics.