Osram loses major customer, shrinks micro-LED dream, sells Malaysian factories owned by PNB, EPF and KWAP
  • The decision was prompted by the cancellation of a major customer, believed to be Apple.
  • The original plan was to buy the factory back from a pension fund or asset management company after 10 years.

In a sign that a once-promising source of future growth is rapidly fading in the world of high-tech manufacturing, ams Osram, an Austrian-German global optical solutions specialist based in Malaysia for 52 years, particularly in the automotive sector, , has halted construction on its recently completed micro-LED factory in Kulim Hi-Tech Park, Kedah, with an estimated US$1 billion (RM4.75 billion) multi-year, multi-stage investment. The current building represents the first phase of that investment.

Micro LEDs are traditional LEDs scaled down to a microscopic level. This technology was once touted as the future of displays.

Osram started operations in Malaysia in 1972 as Siemens. In 2020, Austrian electronics company ams, which designs and manufactures sensors for small form factor, low power, highest sensitivity, multi-sensor applications, acquired Germany-based Osram.

Ams Osram CEO Aldo Kamper said on an April 27 call with analysts in Austria that the factory’s main micro-LED customer, believed to be Apple, according to media reports. Ams Osram has revealed that its cancellation in February has caused it to reevaluate its entry into the global market. In the Micro LED market, we decided to focus on our own Micro LED needs rather than the broader market. That need is met by production in Germany. The company is currently looking for a buyer to take over the lease of the Kulim Micro LED factory.

The lease is held by three Malaysian funds: asset management company Permodalan Nasional Bhd (PNB), pension fund Employees Provident Fund (EPF) and Kumpuran One Persalan (KWAP), which emerged as part of a financial restructuring last year. are doing. , the €400 million (RM2.03 billion) sale and leaseback of the MicroLED site was carried out with a promise from Ams Osram to buy it back from the pension fund in 10 years, and perhaps sooner if it wanted.

Those plans are now being put into action thanks to the cancellation of a deal that Camper described as a “cornerstone” during an analyst briefing. It is unclear whether Ams Osram has yet started negotiations with either party.

In the worst-case scenario, where Ams Osram is unable to find a partner to take over the lease, Ams Osram will continue to invest in three Malaysian funds to meet its financial obligations to PNB, EPF and KWAP, one of the people said. There is no financial impact. I am familiar with the matter.

The new factory is located next to the existing Kulim factory, which manufactures conventional LEDs, and was opened in 2017 with an investment of US$398 million (RM1.9 billion). “The factory is operating as usual,” an Ams Osram executive said on condition of anonymity.

The decision will affect around 500 workers worldwide, a significant number of whom are said to be in Penang. The executive said the company is considering the possibility of redeploying some of these employees to other parts of its Malaysian operations.

The company has grown from 2,000 employees in the early 2000s to approximately 6,500 employees. The latest investment was an expansion to a 60-acre site in Batu Kawan, Penang in March 2022.

Malaysia is an important manufacturing and research and development location for ams Osram. Since its inception nearly 20 years ago, the company’s research and development team, consisting of Penang and Krim, has grown to approximately 400 researchers and has numerous patents to its credit.

“The business outlook for the sensor and LED markets is still growing, and we have other business areas that are doing well and growing,” the executive said.

Ams Osram has been manufacturing LEDs for a variety of applications, from infrared to ultraviolet, at its Malaysian factory. It is also the world’s leading manufacturer of automotive optoelectronics, including a wide variety of automotive headlamps, taillights, and interior lighting.

“We are the clear market leader in automotive optoelectronics, and what has happened has been a difficult road that we will continue to overcome,” the executive said.

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