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Chipmaker TowerJazz sees further growth in 2017 after record 2016

By Steven Scheer

JERUSALEM (Reuters) - Israeli chipmaker TowerJazz projected further growth in revenue and profit in 2017 after posting a record fourth quarter and 2016 as a whole, boosted by robust demand from existing and new customers.

TowerJazz, which makes chips for smartphones, battery chargers, AC/DC adapters and image sensors, said it earned 52 cents per fully diluted share, excluding one-off items, in the fourth quarter, up from 27 cents a share a year earlier.

Revenue grew 34 percent to a quarterly record of $340 million.

The company was forecast to earn 48 cents a share ex-items on revenue of $339.9 million, according to Thomson Reuters I/B/E/S.

It projected first-quarter 2017 revenue of $330 million, plus or minus 5 percent, for a 19 percent annual gain. Analysts expect first-quarter revenue of $329.8 million and $1.4 billion for all of 2017.

Chief Executive Russell Ellwanger said the company wasn't providing a specific outlook for 2017 after setting a number of financial records last year.

"We see growth throughout the year," Ellwanger told Reuters, predicting each quarter of 2017 should beat what had been achieved the year before. "I don't see anything that prevents us from doing that."

TowerJazz posted record revenue of $1.25 billion in 2016 for a 30 percent annual gain. It also earned a record $204 million, versus a net loss of $30 million in 2015.

Much of the company's growth is coming from existing customers in its radio frequency technology, image sensor and power management segments, but the number of new clients and partners are expanding and would benefit TowerJazz in future.

TowerJazz, founded in 1993 as Tower Semiconductor, operates two plants in Israel, one in California and three in Japan through its joint venture with Panasonic.

The company, which has just been added to a revamped blue-chip index in Tel Aviv, lost money for years following heavy investments in its second chip plant in Israel, but has become profitable in the past two years.

TowerJazz bought a wafer manufacturing plant in San Antonio, Texas, in February to boost capacity and provide potential revenue of up to $200 million annually in the next few years.

Ellwanger said the company has capacity for 1.6 billion wafers a year but would need more operational capacity towards the end of 2018 and into 2019.

He reiterated the firm was pursuing multiple opportunities in China, where TowerJazz would buy a factory with a minimal investment and where it would be accretive to earnings right away.

TowerJazz shares were 1.2 percent higher at midday in Tel Aviv.

(Editing by Tova Cohen and David Holmes)