Tower changes direction

Tower Semiconductors, of Migdal Ha'emek, is seeking new avenues for improving its bottom line. Instead of focusing primarily on microchip manufacturing, Tower is branching out. The company will start with upgrading a chip manufacturing plant for a unnamed company in the Far East.

Because the upgrade, valued at about $130 million, will involve few expenses for Tower, its gross profit margin should be relatively high.

Payment for the plant upgrade will span several quarters.

Third-quarter sales at Tower totaled $79.6 million, near the top of the $77 million-$80 million revenue range forecast by company officials. Compared with the parallel quarter last year, revenues were up 36%.

Despite higher revenues, there was only a slight improvement in the company's net losses - which were $30.2 million last quarter and $30.9 million in the parallel. The red ink was due mainly to $16.8 million in financing expenses. As for the coming quarter, Tower expects $90-$94 million in revenues.

Tower recently won a number of large contracts, including a cooperation agreement with the U.S. National Aeronautics and Space Administration (NASA), to develop silicon germanium chip applications for a research mission that will examine the dust in the moon's atmosphere.

Another deal recently signed is for the manufacture of chips for the automotive industry, specifically for Hyundai and Kia. This deal, worth an estimated $20 million, is part of Tower's cooperation agreement with the Korean company C&S Technology, the official supplier of components and multimedia solutions for the two Korean car makers.

"That contract has not yet been signed," said a source at Tower. "The moment it is signed the company will issue an announcement."