Israeli handset maker Moduhas raised $7 million in funding from Qualcomm (NSDQ: QCOM), which gives the chipmaker the right to supply the Modu’s phones with their chips. Modu’s main product is a tiny mobile phone weighing 40 grams that can be slipped into interchangeable “jackets” that can be tailored to a certain target market. They have a jacket aimed at children, for example. The other idea, according to Modu’s website, is that the jackets could be “custom branded” with fashion brands, movies or music artists, and could come pre-loaded with “exclusive content and a unique UI.” The phones can also be placed into Modu-enabled “mates”, which expand on their functionality. For example, they can be slipped into a compatible camera to make a camera phone. There’s also examples of a “GPS mate,” a “Car mate” and a “night mate” in its online catalogue.

VCCafe.com, a blog reporting on Israeli tech companies, which picked up the story from local newspaper Calcalist.il, added that the new investment came at a good time for the two-year old company. Modu was founded by Dev Moran, inventor of the flash drive and CEO of mSystems, the company he used to sell them. In 2006, he sold mSystems to SanDisk for $1.6 billion. Moran had ambitious goals for Modu when he started the company, setting a target to raise $100 million in funding. He ended up raising $65 million. Previously, the company raised $20 million, with Moran contributing as well as Genesis Partners, Gemini Israel Funds, and SanDisk (NSDQ: SNDK). The company has now had two waves of layoffs, shedding 35 percent of staff, and cutting salaries.