VIENNA (Reuters) - Austrian printed circuit board maker AT&S said its first-quarter core profit fell 33% due to lower demand from smartphone makers and the automotive industry, knocking its shares despite an upbeat medium-term forecast.

AT&S generates the majority of its revenue with circuit boards for smartphones and tablets and so-called inter circuit (IC) substrates - platforms onto which electronic components are applied. These IC substrates are designed for use in high-end industrial applications, medical devices and navigation systems.

Earnings before interest, depreciation and amortization (EBITDA) came in at 34.9 million euros ($38.7 million) in the first quarter of its 2019/20 business year on flat revenue of 222.7 million euros, AT&S said on Friday.

It confirmed its full-year outlook of a stable revenue and an EBITDA margin of 20%-25% “although the market environment is very challenging and visibility is still low”.

AT&S shares fell as much as 3.9%, largely in line with the European technology sector index, which fell as much as 2.9% after U.S. President Donald Trump tweeted he would impose an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1.

However, AT&S increased its medium-term guidance and now expects revenue to double to 2 billion euros in the next five years after previously forecasting 1.5 billion.

AT&S’s optimism builds on growth opportunities it sees in areas including the new 5G standard in telecommunications and in applications for autonomous driving.

“Despite a flat development in 2019 smartphone unit sales, high-end PBC (printed circuit boards) demand for mainboards and modules will grow due to additional functionalities like 5G, artificial intelligence and sensors,” it said.

The group said last month it plans to invest up to 1 billion euros in the next five years to expand its production capacities in Austria and build a new plant in the Chinese city of Chongqing, which is expected to start production by end-2021.

AT&S already operates two plants in the city of Chongqing and one plant in Shanghai.

The expansion will reduce dependencies from suppliers and make it possible to serve more customers, AT&S said.