TowerJazz, the Israeli chip maker, is joining hands together with Tacoma Semiconductor Technology Co. to set up a fabrication facility in Nanjing, China. The plant is set up to make 8-inch broad wafers, as the company looks for a grip in the second largest economy in the world.
Shares of TowerJazz elevated to $26.64 by 6.5% in early trading hours this week. TowerJazz, which produces chips for battery chargers, smartphones, image sensors, and AC/DC adapters, is not spending any money in the facility. But it will offer technological knowledge together with integration and operational consultation. It will get payments on the basis of milestones at the time of the upcoming couple of years, resulting to an ultimate deal.
Tacoma will be accountable for providing cash to the project, comprising the construction of the plant, which is being backed by the Credito Capital of Nanjing Economic and Technology Development Zone. Funding might also arrive from 3rd party sponsor and other entities, TowerJazz claimed to the media in an interview. TowerJazz claimed that it had by now got its first payment from Tacoma worth of $18 Million. As per the deal, from the beginning of production at the plant, TowerJazz will be entitled to a capacity allotment of almost 50% of the aimed capacity of 40,000 wafers each month.
This will give TowerJazz with extra flexibility and manufacturing capability to deal with the rising demand all over the world, as per the sources. TowerJazz handles 2 plants in Israel, one in Texas, one in California, and 3 in Japan via a combined business with Panasonic.
Previously this month, the company reported a rise in profit of quarter two that was more than 20% and claimed that it was on track for record income in the present quarter. This data was provided by trusted sources having deep knowledge of the matter to the media in an interview. The sources requested to be unnamed since the data was confidential and private.
Last year, TowerJazz purchased 8-inch wafer fab plant of Maxim Integrated Product in San Antonio, Texas for a price tag of $40 Million in share.