AMS Osram books $750 mln charge after client cancels Malaysia project

Austrian sensor maker AMS Osram AMS said on Friday it will book a 700 million euro ($750.33 million) one-off cost for the cancellation this year of a major new project in Malaysia by an unnamed client.

After volatile early trade, the stock was up 6% at 1038 GMT, topping the Swiss mid-cap index (.SMIM), as investors were relieved to see the company lay out a plan for exiting the project. The cost came at the lower end of the previously indicated range of 600 million euros to 900 million euros.

AMS Osram said in February that a major client had cancelled a microLED technology project, setting off a record drop in its shares. AMS has declined to disclose the client's identity, though analysts have said it could have been Apple AAPL.

Apple did not immediately respond to a request for comment.

AMS Osram said more than 500 employees at its sites in Malaysia and German would be affected.

It said it will transfer its Malaysian 8" wafer factory used for microLED, to a new lessee with high priority, which it expects will cut its long-term debt by around 400 million euros.

When asked when the transaction might close, AMS Osram's CEO Aldo Kamper said it would probably happen next year and he company hoped for "quite a bit of upside" compared to the original investment.

"We haven't started an official sales process but we got at least 10 cold calls from interested parties," he told analysts.

Vontobel analyst Mark Diethelm said in a note the sale of the factory should see larger buyer interest.

AMS Osram reported revenue of 847 million euros million in the first quarter, in line with analysts' forecast, according to LSEG data.

On Thursday, Aixtron AIX German chip systems manufacturer which AMS Osram uses to make displays used in smartphones or watches, beat market expectations with its first- quarter revenue.

($1 = 0.9329 euros)