Germany’s Osram investing 1bil euros in Kulim LED plant (Update)

  • Business
  • Wednesday, 11 Nov 2015

KUALA LUMPUR: Germany-based Osram is investing 1bil euros to build a new LED chip plant in Kulim, Malaysia. The plant is set to be the largest and latest 6-inch LED chip production site in the world. 

According to a statement released by the Malaysian Investment Development Authority (MIDA) on Wednesday, Osram announced an additional investment of 3bil euros by the year 2020. The remainder 2bil euros will be used for the group’s global research and development activities.

Osram’s investment is in line with it becoming a semiconductor company following the planned disposal of its traditional lamps and light bulbs business.
“We certainly welcome such expansion by Osram, one of the eight pioneer electronic companies that commenced operations in the Bayan Lepas Free Trade Zone during the early 1970s. 

“This project will be beneficial to the country in terms of jobs creation as well as further strengthening the value chain of other local players in the LED industry,” said MIDA CEO Datuk Azman Mahmud. 

He added that the project will complete the LED ecosystem in Malaysia, and make the country more conducive for the deployment of high-technology projects.

Malaysia is now gaining prominence as a production hub for LED manufacturers. The development and production of LED cluster in the country covers semiconductor devices for LED, wafer fabrication, lighting products and solutions (LED applications – vehicle lighting, backlights and displays).

Azman said MIDA would provide full support to Osram to ensure the project is successfully implemented and to facilitate the company’s existing operations in Malaysia. 

Below is the earlier story:

MUNICH, Germany: German lighting company Osram will start investing for growth again this year as it transforms itself into a semiconductor company following the planned disposal of its traditional lamps and light bulbs business, it said on Tuesday.

Osram, which has cut about a fifth of its workforce over the past four years as it slimmed down to compete with Asian rivals, said it would invest about 3 billion euros ($3.21 billion) by 2020 including 1 billion for a new chip factory in Malaysia.

"We are now switching the focus to growth," Chief Executive Olaf Berlien said in a statement.

Osram said it aimed to achieve revenue of between 5 and 5.5 billion euros by 2020, representing average annual growth of 8 percent after the disposal of its Lamps unit, which has sales of 2 billion euros.

The Lamps business, which is in decline, is expected to fetch 300-400 million euros from a Chinese buyer keen on acquiring its brands and distribution channels.

Osram said it would buy back up to 9.81 percent of its capital stock for a maximum of 500 million euros in a 12-18 month programme, likely starting in the first quarter of 2016, and would keep its dividend at least steady for fiscal 2016.

It also announced forecast-beating profits for its financial year to end-September, with a 28 percent jump in adjusted earnings before interest, tax and amortisation (EBITA) driven by automotive and LED components.

Osram's lighting solutions and systems unit, whose projects have included illuminating the frescoes of the Sistine Chapel, narrowed its loss to a better-than-expected 1 million euros.

Shares in Osram were marginally higher in after-hours trading in Frankfurt.

The German company competes with Dutch Philips - which is also realigning its lighting business - U.S.-based General Electric, Austria's Zumtobel and a host of Asian LED makers.

Osram said it expected slightly lower sales in 2016 on a comparable basis and a substantially lower adjusted EBITA margin due to its innovation and growth initiative.

Net profit should rise sharply thanks to an expected book gain from the sale of its stake in China's Foshan Electrical & Lighting Co announced in September. - Reuters
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