Tower Semiconductor Q3 Earnings: Revenue And Profit Beat, Plans $350 Million Expansion

Tower Semiconductor Ltd (NASDAQ: TSEM) reported a fiscal third-quarter 2024 revenue growth of 3.4% year-on-year to $370.51 million, marginally beating the analyst consensus estimate of $370.33 million.

The Israel-based contract chipmaker’s adjusted EPS of $0.57 beat the analyst consensus estimate of $0.53. The stock price gained after the print.

Gross profit was $93.06 million, up 7.1% Y/Y. The margin improved by 86 bps to 25.1%. Operating profit of $55.76 million declined 84.6% Y/Y as last year’s profit included an Intel Corp INTC merger contract termination fee of $314 million.

As of September end, the company generated $125 million in operating cash flow and held $1.21 billion in cash and equivalents.

The company has initiated a $350 million investment plan to boost capacity and enhance SiPho (Silicon Photonics) and SiGe (Silicon Germanium) capabilities.

This expansion involves ramping up and qualifying for a 200mm capacity at its San Antonio and Migdal Haemek sites and its 300mm facility in Uozu to meet increasing customer demand in high-growth markets.

Tower Semiconductor’s CEO, Russell Ellwanger, accentuated the company’s consistent quarter-over-quarter revenue growth, including the outlook for Q4.

He attributed this to strong double-digit year-over-year gains across key technology platforms like advanced 300mm RF SOI, 65nm Power BCD, and next-generation Silicon Photonics and Silicon Germanium technologies.

Ellwanger also mentioned the rising demand for SiGe and SiPho, prompting investments in multiple factories to expand capacity. This strategic move aims to maintain Tower’s leadership in providing essential components for AI-driven data center markets, particularly optical transceivers.

Outlook: Tower Semiconductor expects fourth-quarter revenue of $387 million, with a 5% upward or downward range versus the $379.23 million consensus.

Tower Semiconductor stock surged over 42% year-to-date.

TSEM Price Action: TSEM stock is up 8.70% at $46.85 premarket at the last check Wednesday. 

Photo via Wikimedia Commons