Israeli chipmaker TowerJazz's Q2 profit rises as forecast

[JERUSALEM] Israeli microchip maker TowerJazz reported a more than 20 per cent rise in second-quarter net profits on Thursday and said it was on track for record revenues in the current quarter, in line with analysts' forecasts as demand continues to grow across its product range.

TowerJazz, which makes chips for smartphones, battery chargers, AC/DC adapters and image sensors, said on Thursday it earned 49 US cents per diluted share in the second quarter, up from 40 US cents a year earlier. Revenue rose 13 per cent to a record US$345 million.

The company was forecast to earn 49 cents a share on revenue of US$345 million, according to Thomson Reuters I/B/E/S.

It expects third-quarter revenue to rise by around 9 per cent to US$355 million, plus or minus 5 per cent.

Analysts also are forecasting revenue of US$355 million in the third quarter and US$1.39 billion for all of 2017, which would be an 11 per cent increase on 2016.

TowerJazz operates two plants in Israel, one in California, one in Texas and three in Japan through its joint venture with Panasonic.

It lost money for years following heavy investments in its second chip plant in Israel, but has become profitable in the past two years.

Chief Executive Russell Ellwanger told Reuters that TowerJazz was looking to increase its capacity and was pursuing different models of acquisition.

This could be through a deal with a seller guaranteeing a certain amount of utilisation for a set period, buying an entire business if it meshes well with TowerJazz, or going after new technologies. "I can say in each three of those type of segments we do have activities," Mr Ellwanger said.

He noted that TowerJazz posted organic growth, which excludes acquisitions, of 26 per cent that resulted in an annual net profit run rate of US$200 million, the company having made a profit in the first half of the year of US$95.5 million.

Its shares were largely flat at 93.25 shekels a share at midday in Tel Aviv. They are up 27 per cent so far in 2017 after a 32 per cent gain in 2016.

REUTERS