In February 2024, ams-Osram announced that it's cornerstone customer (Apple) cancelled its microLED project, which will have dire implications for Osram's own $850 million 8-inch microLED epiwafer factory in Malaysia. Back then ams-Osram estimated that it will have impairment charges of $650 to $900 million and it will also likely to cancel or delay some of its investments in Malaysia.
ams-Osram now announced its plans and strategy following Apple's decision to cancel its project. It seems as if the company has decided to pretty much withdraw from the microLED display market, and the only remaining microLED development efforts will focus on automotive lighting products. ams-Osram now believes that microLED displays will primarily play a role in several smaller applications that also will scale slower and later than previously expected. We also believe that microLED displays will take a longer time to mature than some in the industry have expected.
About 500 employees will be effected, in both Germany and Malaysia, and some will be reallocated to other sectors within ams-Osram (but it seems as if most employees working on microLED technology will be laid-off). ams-Osram is still open for collaboration projects, and says that it may re-engage in microLED display development together with potential customers, in an "essentially cash flow neutral manner" - which means that it will require payment for R&D efforts.
The stop of the cornerstone project will incur one-time cost of around EUR 700 million, at the lower end of the previously indicated range of EUR 600 to 900 million. The company is also pursuing to exit the Sale-and-Lease-Back (SLB) contract for its state-of-the-art Kulim-8-inch factory to a new lessee with high priority.
ams-Osram is not the only company effected by Apple's decision to cancel its microLED wearable project. Singapore-based electronics assembly solutions provider Kulicke & Soffa announced that it was also effected, to the tune of $110-130 million as it cancelled its own project with Apple. KLA Corporation recently announced that it is withdrawing from the FPD market altogether. KLA's display inspection business unit suffered from a decline in its business for several years, and the current decision to close the unit was due to a project cancellation with a major customer - likely Apple.
