* Q3 adj. EBIT margin at 13 pct, seen at 16-20 pct in Q4
* Q3 revenues at $479.6 mln, seen at $570-610 mln in Q4
* Shares fall to 20-month-low
* Face recognition sensors for 2 Android OEMs in production
* Works on sensors that scan surroundings for major OEM
* Environmental sensing no longer a strategic focus (Analysts, details, background)
VIENNA, Oct 23 (Reuters) - AMS AG's shares fell by nearly a third on Tuesday after its fourth-quarter outlook raised doubts about the mid-term targets of the Apple reliant Austrian chipmaker.
"Guidance for the fourth-quarter 2018 is below consensus and our forecast," Liberum analysts said in a note, adding they were sceptical about AMS meeting its 2019 revenue growth target and operating margin target of 30 percent in 2020.
Analysts have voiced doubts about when the specialist in facial recognition sensors will be able to reach its 2019 target of more than $2.7 billion in revenue.
And in July AMS postponed its EBIT (earnings before interest and taxation) margin target of 30 percent to 2020 from 2019, saying this was due to possible changes to its portfolio.
After a delay of several months, production for Apple appears to be on track and analysts estimate that AMS's facial recognition sensors are in all three newly launched iPhones.
Analysts have also criticized a lack of visibility on how broadly AMS 3D facial recognition sensors will be adopted in Android devices, which they consider essential to future growth.
They also cited an increasing competition, which might make it harder for AMS to increase its operating margin.
AMS shares fell to a 20-month-low in early trading, dragging down the European tech sector. AMS shares dropped as much as 32 percent at the market open and traded 22 percent lower at 38.65 Swiss francs at 0745 GMT.
"(AMS's) fourth-quarter outlook is even below declining consensus and margin development still lags," Alpha Trading said in a note to clients.
After years of growth, semiconductor makers are scaling back activity or delaying projects amid signs of weakening demand.
Swiss vacuum valve maker VAT Group announced it had cut working hours at one of its factories due to a fall in demand from the chip equipment makers it supplies.
However, AMS said its third-quarter EBIT reached $60.2 million or 13 percent of revenue from $40.5 million last year thanks to increasing production volumes for a recently launched global smartphone platform.
AMS does not identify its customers, but this was believed to be a reference to Apple, which according to analyst estimates accounts for around 40 percent of AMS sales.
The EBIT margin is expected to rise to 16 to 20 percent in the fourth quarter, AMS said.
Revenues in the quarter reached $479.6 million, against 2017's $305.5 million and are expected to rise to $570 to $610 million in the three months through December.
Analysts forecast fourth-quarter EBIT of 172 million euros on revenues of 576 million euros, Refinitiv data showed.
To reduce its dependency on Apple, AMS has been working on selling its sensors to Android customers. This has become more important after the U.S. tech giant agreed a $600 million deal with German rival Dialog Semiconductors this month.
The Swiss-listed company said it has started to produce 3D face recognition sensors for two Android customers, including China's Xiaomi, the fourth-biggest smartphone maker.
Credit Suisse analysts think that Huawei's new Mate20 Pro phones also use AMS sensors for facial recognition, which would add the second-biggest smartphone maker to its customer list.
AMS said it was working on sensors that are capable of scanning surroundings in 3D, so-called world-facing 3D sensors, for a major smartphone manufacturer. (Reporting by Kirsti Knolle; Editing by Adrian Croft and Alexander Smith)