Israeli chipmaker TowerJazz sees rising sales

Reuters News
Posted: Nov 06, 2013 6:16 AM

By Tova Cohen

TEL AVIV (Reuters) - Israeli circuit maker TowerJazz said it expects sales to rise in the fourth quarter and next year as demand for chips used in tablets and mobile phones grows.

The company, which makes chips used in smartphones such as Apple's iPhone and Samsung's Galaxy, as well as battery chargers and AC/DC adapters, said it has seen a rise in orders for building customers' designs in the first nine months of 2013 compared with the year-ago period.

"This is a very strong indication of core business growth and this could be demonstrated in the fact that fourth-quarter guidance shows growth that is substantially better than the industry," Chief Executive Russell Ellwanger said on Wednesday.

It takes up to nine months from when a mask - the plate on which a circuit is eventually etched - enters a factory until production ramps up and 18 months to hit peak volume so strong growth in masks should pay off in the second half of 2014, he said.

TowerJazz reported adjusted net income of $12.2 million in the third quarter, down from $31.6 million a year earlier. Revenue fell to $132.6 million from $154.6 million a year earlier but was up 6 percent from the second quarter.

The company attributed the declines to a contractual decrease in sales to Micron at its plant in Japan, which had been flagged. Excluding the Micron reduction, revenue rose by $4 million.

TowerJazz itself had forecast third-quarter revenue of between $130 million and $140 million.

For the fourth quarter, it projects revenue of $133-$143 million. TowerJazz also expects profits margins to be slightly better in the fourth quarter over the third quarter.

TowerJazz has said it expects to start seeing revenue next year from an anticipated contract to build a plant in India. It is part of one of two consortiums that have proposed building semiconductor plants in India. TowerJazz's consortium includes India's Jaiprakash Associates and IBM.

Ellwanger said TowerJazz's group received "in principle approval" that included questions that have since been answered and is ready to go ahead once the green light is given.

Business daily Nikkei reported last month that Panasonic Corp is in talks to sell some chip plants to TowerJazz. Ellwanger declined to comment on the report but did say TowerJazz is always looking at opportunities.

(Reporting by Tova Cohen; Editing by Steven Scheer and Louise Heavens)