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iPhone X supplier AMS shrugs off fears over 3-D sensor

Austrian chipmaker relies on facial recognition tech to grow in Q4 and 2018

Apple's iPhone X is expected to hit the shops early in November but there is speculation that shipment may be lower than hoped due to production problems with 3-D sensor components.   © Reuters

BEIJING - Austrian chip maker AMS, which makes an optical sensing part for the new 3-D sensor module used in Apple's iPhone X, on Tuesday dismissed speculation that the new facial recognition component is stuck in a production bottleneck.

"I am not nervous at all about it," AMS Chief Executive Alexander Everke told analysts during an earnings call when he was asked if he saw any issue with the production of the 3-D sensor. "We see very strong performance in Q4. I see very strong performance in 2018," Everke said.

Still, the overall supply of iPhone X is likely to be tight this year. The Nikkei learned Tuesday that initial shipments of iPhone X are expected to total around 20 million units, only half the planned amount for this year, allegedly due to technical issues with the production of components used in facial recognition.

But the AMS chief executive said that his company had not received any negative feedback from its major customer, referring to Apple, about the component.

Hon Hai Precision Industry, known as Foxconn Technology Group, is solely responsible for assembling Apple's flagship smartphone this year.

Foxconn-controlled Sharp Corp. and South Korea's LG Innotek, a unit of LG Electronics, are responsible for assembling the 3-D sensor module.

The comments by the AMS chief executive are believed to be aimed at dispelling speculation that a production issue with the 3-D sensor could affect the performance of the component that users need to unlock phones and make payments on Apple's upcoming iPhone X.

AMS said it expected sales in the current quarter to grow 68% to 83% sequentially, or 229% to 259% year-over-year, to 440 million euros ($517.38 million) to 480 million euros.

Adjusted operating margin will increase significantly from 26% to 29% in the October-December period, driven by increasing utilization of its optical sensing business, said Chief Financial Officer Michael Wachsler-Markowitsch.

Everke said the company's 3-D sensing technology was attracting substantial interest from Chinese and South Korean companies, though the company's long-term guidance for its revenue to grow at the compound annual growth rate of 40% between 2016 and 2019 did not include any potential contribution from Android handset business.

AMS shares climbed more than 20% intraday in Switzerland on Tuesday, hours after it reported strong sales growth in the last quarter. Revenue surged 79% to 262.6 million euros although net profit dropped 63.9% to 20.2 million euros.

Apple will begin taking pre-orders for iPhone X on Oct. 27, and the new handset will go on sale on Nov. 3.

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