An unassuming office building on Jamboree Road in Newport Beach houses critical assets for the country’s national defense.
Inside the North American headquarters of Israeli chipmaker Jazz Semiconductor Inc., its 120,000-square-foot factory annually churns out about 290,000 wafers—the foundation for chips designed by commercial, industrial and military customers.
The defense industry accounts for about 10% of the company’s annual sales of about $500 million. Revenue from that segment is expected to increase in the coming years, thanks to a recent partnership with the U.S. Air Force.
The company, which operates under the brand name TowerJazz, was awarded a foundry improvement and sustainability program last month that aims to boost research and development efforts in a specialized area of military applications: infrared sensors.
“That has vast applications across all agencies in the Department of Defense: surveillance, cameras, night vision, weapons sightings,” said Mike Scott, director of the company’s USA Aerospace and Defense Division. “We have to have the best tools out there.”
Under the five-year deal, TowerJazz will match the Air Force’s $5 million funding for the program that’s earmarked to improve manufacturing processes and techniques for what’s known as large-format readout integrated circuits.
Those components are essentially the foundation for infrared detectors and imaging sensors used in air, land, sea and space applications.
TowerJazz and Phoenix-based ON Semiconductor Corp. are the big players in the segment.
Big customers include Boeing Co., Northrop Grumman, Lockheed Martin and other defense contractors.
“It’s very important for those organizations to have onshore technology and secure onshore manufacturing to support our national defense and security,” Scott said.
TowerJazz’ history in the defense sector dates back more than 30 years. It got its start as the chip-making arm of Rockwell International Corp., which no longer exists but left behind Milwaukee-based Rockwell Automation Inc. and Cedar Rapids, Iowa-based Rockwell Collins Inc.
The company is Orange County’s second largest employer among chipmakers, with about 700 workers.
Lantronix Convinces More
Irvine-based networking equipment maker Lantronix Inc. continues to win over some investors on Wall Street.
The company’s shares are up nearly 13% to a modest market value of about $36.4 million since its 45% spike last month following Google Inc.’s $3.2 billion buy of Nest Labs, which makes smart thermostats and smoke alarms for the connected home, a segment that’s pegged to explode in the coming years.
Lantronix is coming off a solid December earnings report, with $11 million in sales, which was in line with Wall Street estimates. But more importantly, the company posted an adjusted profit of $191,000, its second consecutive quarter in the black.
Analysts had forecast a loss of about $583,000 in the recently ended quarter.
Lantronix specializes in machine-to-machine communications.
M2M global sales in the segment are expected to grow 23% annually over the next seven years to nearly $950 billion, according to Washington, D.C.-based Carbon War Room.
“It seems the company may finally be ideally positioned to take advantage of industry opportunity,” said a recent blog on investor website Seeking Alpha.
