Israel-based Tower Semiconductor Ltd. is investing $15 million to $20 million to upgrade its Newport Beach manufacturing plant to meet growing demand for new generations of chips for smartphones and other wireless devices.
The added business, fueled by the booming Internet of Things market, has led the company to boost local employment by more than 40 people this year and by nearly 150 since January 2014.
“We’ve added a lot of factory workers, but we also added to the engineering side,” said Marco Racanelli, manager of the Newport Beach site at 4321 Jamboree Road.
Racanelli serves as senior vice president and general manager of the chipmaker’s RF/High Performance Analog and Power Business Groups, and he’s general manager of the U.S. Aerospace & Defense Business Group.
The company, which operates under the brand name TowerJazz, is Orange County’s second largest chipmaker by headcount here, with 786 workers in Newport Beach as of August, according to Business Journal research. It employs about 2,800 worldwide.
TowerJazz recently announced that an unnamed customer provided a $30 million advance payment for capacity expansion to TowerJazz’ facilities in Newport Beach, Japan and Israel that’s related to the latest upgrades.
Its 120,000-square-foot factory and office in the affluent coastal city specializes in front-end radio frequency technology, an essential component in transmitting signals in every smartphone and wireless device.
TowerJazz has carved out a nice niche producing RF chips that improve battery life without degrading the signal, according to Racanelli.
“That is the biggest part of the business in Newport Beach and the R&D investment,” he said. “It’s that manufacturing technology and the processing technology that differentiates what we do.”
TowerJazz has more than 200 customers, some of which are the world’s largest chipmakers in the world, including Intel, Samsung, and Avago Technologies, which is set to acquire Irvine-based Broadcom Corp. in a blockbuster $37 billion deal.
Customers buy their chips from TowerJazz and then typically sell them to original equipment manufacturers that embed the components in products, such as smartphones, laptops, digital cameras and other smart devices.
TowerJazz’ Newport Beach facility serves as the company’s North America headquarters and houses specialized military applications of infrared sensors through a partnership with the U.S. Air Force. Big customers include Boeing Co., Northrop Grumman, Lockheed Martin and other defense contractors.
New Equipment
Most of the capital improvements in Newport Beach will go toward production equipment.
“We have some older technology that we’ll ramp down, and some newer tech will ramp up,” Racanelli said.
The upgrades will enhance manufacturing processes at TowerJazz’ Newport Beach plant but won’t necessarily increase production capacity, which is at about 90% utilization.
The local foundry annually pumps out between 288,000 and 300,000 wafers—the foundation for chips designed by commercial, industrial and military customers.
TowerJazz confirmed to the Business Journal that it will renew its lease at the 311,000-square-foot building. Its current lease runs through 2017, with a 10-year extension option.
The building sits on the grounds of the planned Uptown Newport mixed-use project, which calls for 1,244 condos and apartments, as well as about 11,500 square feet of retail space.
The project, which is in the early stages of development, will be built in two phases. Developers aim to eventually raze the TowerJazz building in the latter phase to make way for an additional 564 homes.
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 Rockwell Collins Inc. in Cedar Rapids, Iowa,
TowerJazz, which is headquartered in the technology and defense hub of Migdal Haemek, Israel, posted sales in the second quarter of $236 million, up 35% from a year earlier, and net income of $54 million, up 74%. The company is on track to break $1 billion in revenue this year for the first time in its 23-year history.
