Despite global slowdown, TowerJazz grows

10 May, 2016

Maxim's fab deal contributed more than $40 million to the net profit. TowerJazz expects revenues in Q2 to be $300 million, despite the recent slowdown in the semiconductor market

Maxim’s fab deal contributed more than $40 million to the net profit. TowerJazz expects revenues in Q2 to be $300 million, despite the recent slowdown in the semiconductor market

TowerJazz plant. Migdal Haemek. Israel
TowerJazz plant. Migdal Haemek. Israel

TowerJazz is continuing its forward charge. After presenting revenues representing annual figures of over $1 billion last month, the Israeli chip manufacturer reported record earnings of $278 million in Q1 2016. This is an increase of 23% compared to the same quarter last year, and a 9% increase from the previous quarter.

After a net loss of $73 million in Q1 2015, the company reported a net profit of $66 million in Q1 2016. This figure includes the net worth of the Maxim fab in San Antonio, acquired by TowerJazz late in 2015. The acquisition has actually contributed a tidy $41 million to Q1 net profits. Excluding this sum, the net profit totaled $25 million, a 12% increase from the previous quarter.

The San Antonio fab acquisition is the latest in a chain of deals and moves made by towerJazz in its drive to expand. The San Antonio fab produces 8-inch silicon wafers.  Its production increased TowerJazz’s production volume by 28,000 wafers a month. The deal signed between Maxim and TowerJazz the latter’s commitment to continue and buy the produced wafers for the next 15 years. TowerJazz now has 6 fabs around the world, two of these in Israel.

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Maxim’s facility in San Antonio, Texas

TowerJazz CEO Russel Ellwenger commented that the acquisition of the San Antonio factory  increased TowerJazz’s business relationship with Maxim while providing additional capacity in close proximity to our large US customer base. “We are pleased with our first quarter financial results; continued revenue and EBITDA growth above previous records” said Ellwenger.

TowerJazz, a manufacturer of processors for smartphones, power supplies, AC/DC adapters and CMOS expects Q2 2016 to grow further and exceed $300 million, a 27% increase compared to the same quarter last year and a 8% increase compared to Q1 2016. “Based upon customers’ demand, organic capacity increases and strong assurance of revenue growth within our Japanese factories, we expect significant performance in 2016, top and bottom lines” said CEO Ellwenger.

The Market weakens, but towerJazz grows stronger

Even though the semiconductor market is cooling since 2015, Tower Jazz is experiencing a growing spree. The Israeli producer, that had some ups and downs along the years, is expanding its market share, fortifying its position as one of the world’s leading foundries. According to the Gardner research group, Tower Jazz is now in place 7 amongst the global semiconductor manufacturers by revenue. TowerJazz’s market share is 2%. The biggest global foundry is by far Taiwanese TSMC, holding an impressive 54% of the market.

Despite the strong figures published by TowerJazz, the global semiconductor market is experiencing a slump in growth. The market grew by a mere 4.4% in 2015, compared to a double digit growth in 2012-2014. According to Gartnet, the slowdown is to be attributed to a decrease in demand for Smartphones, PCs and Tablets.

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Posted in: Business , News , Semiconductors

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