Chipmaker TowerJazz sees core continuing growth

Chip manufacturer TowerJazz said it expected its main business units to grow further this year, as it reported higher fourth-quarter profit but cautioned the sector had entered 2019 facing macro-economic headwinds.

TowerJazz, which specializes in analogue chips used in cars, medical sensors and power management, sees first-quarter revenue in a range of 5% above or below $310 million, in line with expectations.

CEO Russell Ellwanger declined to give a full-year forecast after the company recorded $1.3 billion in 2018 revenue but said that its various businesses were performing well with significant contracts forged recently.

“We see core business growth throughout the year,” he told Reuters. “Overall, every one of our core businesses is a very big, stable, growth market.”

The company reported diluted earnings per share excluding one-time items of 41 cents in the fourth quarter on Tuesday, up from 37 cents a year earlier. Revenue slipped to $333.6m. from $357.6m.

Analysts had forecast adjusted EPS of 42 cents on revenue of $336.9m., according to I/B/E/S data from Refinitiv.

Ellwanger noted that the renegotiation of a contract in the second quarter could weigh on revenues, although that would likely be offset by core growth.

“On an organic basis we see ourselves growing nicely and that’s a function of the wins we had in 2017 and 2018,” Ellwanger said.

Overall, the chip market has seen a pullback in the mobile sector which has not reversed so far in 2019, he said, while geopolitical concerns, partly due to US-China trade tensions, had led to uncertainties in supply.

“There is more of a closer inventory control... Nobody wants to be caught holding inventory that could become stale and obsolete,” Ellwanger added.

TowerJazz’s shares were up 2.8% in afternoon trading in Tel Aviv.(Reuters)