TowerJazz sees better quarters ahead, eyes India plant

Last Updated: Thu, May 09, 2013 11:07 hrs

By Tova Cohen

TEL AVIV (Reuters) - Chipmaker TowerJazz expects demand for tablet computers and the growing use of chips in appliances like washing machines to drive quarter-on-quarter revenue growth for the rest of this year after a fall in the first quarter.

The Israel-based company, which has submitted a bid with two partners to build a semiconductor plant in India, also said on Thursday it had been advised a decision would be made by the government in the next few weeks.

"We don't have assurances of having won anything," Chief Executive Russell Ellwanger said, adding he would meet India's information technology minister next week during a visit to Israel.

TowerJazz, which makes chips used in smartphones like Apple's iPhone and Samsung's <005930.KS> Galaxy models as well as battery chargers and AC/DC adapters, has submitted a bid with Indian infrastructure company Jaypee and an unnamed technology firm, which Indian media say is IBM .

TowerJazz posted first-quarter net profit excluding one-time items of $6.5 million, down from $32 million a year earlier as revenue fell to $113 million from $168 million. That compared with the company's own revenue forecast of $110-120 million.

TowerJazz said the revenue decline was short term and in line with its supply agreement with Micron Technology , which sold its plant in Nishiwaki, Japan, to TowerJazz in 2011.

It forecast revenue of $122 million to $132 million in the second quarter, with the mid-range of this outlook representing 13 percent growth over the first quarter.

Ellwanger projected quarter-over-quarter growth throughout the year, which he said would be "meaningful".

"I'm not talking one or two percent," he said.

In the past few quarters, TowerJazz has faced a decline in sales of its discrete components - chips that are not integrated circuits - as consumers opt to buy tablets instead of more expensive and larger personal computers. Tablet makers use fewer discretes, which take up a relatively large area.

But Ellwanger said the discretes business was starting to recover, helped by the fact that people upgrade tablets more frequently than PCs and by the expansion of discretes into larger consumer goods, where they can help cut power usage.

"In the second quarter we're moving close to our forecasted numbers and the third quarter promises to hit forecasted numbers. That's a very promising sign," he said.

TowerJazz shares were down 1.4 percent to 23 shekels in midday trade in Tel Aviv. (Editing by Mark Potter)

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