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Tower Semiconductor (TSEM)
NASDAQ:TSEM
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Tower
(NASDAQ:TSEM)
Rating:73Outperform
Price Target:
$61.00
▼(-3.50% Downside)
Positive Factors
AI Data Center Growth
Tower Semiconductor is experiencing strong growth in its AI Data Center and RF Mobile businesses, contributing to a solid quarterly performance and positive outlook.
Silicon Photonics Growth
The RF Infrastructure segment grew 72% annually during the quarter, with notable growth in Silicon Photonics and Silicon Germanium Optical Transceiver revenue.
Negative Factors
Inventory Challenges
Tower's RF-SOI switch business is recovering from previous inventory challenges and is expected to continue growing in the coming quarters.
Revenue Dependency
The Power IC revenue for Tower Semiconductor increased significantly, driven by the ramp-up in Apple's internal baseband modem.
Tower (TSEM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.04B
Dividend YieldN/A
Average Volume (3M)1.33M
Price to Earnings (P/E)36.2
Beta (1Y)1.60
Revenue Growth7.18%
EPS Growth-60.59%
CountryUS
Employees5,613
SectorTechnology
Sector Strength83
IndustrySemiconductors
Share Statistics
EPS (TTM)0.50
Shares Outstanding111,756,620
10 Day Avg. Volume1,980,758
30 Day Avg. Volume1,327,538
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.55
Enterprise Value/Revenue2.61
Enterprise Value/Gross Profit11.65
Enterprise Value/Ebitda7.95
Forecast
1Y Price Target
$67.59Price Target Upside6.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Tower Business Overview & Revenue Model
Company DescriptionTower Semiconductor Ltd., an independent semiconductor foundry, manufactures and markets analog intensive mixed-signal semiconductor devices in the United States, Japan, other Asia countries, and Europe. It provides various customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The company also offers wafer fabrication services and design enablement platform for design cycle, as well as transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, military, and medical device products. The company was incorporated in 1993 and is headquartered in Migdal Haemek, Israel.
How the Company Makes MoneyTower Semiconductor generates revenue primarily through its foundry services, which involve the fabrication of semiconductor devices for various customers. The company typically charges its clients for the manufacturing of ICs based on the complexity and volume of the orders. Key revenue streams include contracts with major semiconductor companies and partnerships with firms requiring specialized manufacturing capabilities. Additionally, Tower benefits from long-term agreements with clients, which provide revenue stability and predictability. The company also engages in joint ventures and collaborations, enabling it to expand its technological offerings and access new markets, further contributing to its earnings.
Tower Earnings Call Summary
Earnings Call Date:Aug 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 17, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth and future guidance, particularly in RF infrastructure and Silicon Photonics, supported by a robust financial position. However, there are challenges related to underutilization in some facilities and previous weaknesses in the RF mobile business. Overall, the positive aspects and growth prospects outweigh the current challenges.Q2-2025 Updates
Positive Updates
Strong Revenue and Profit Growth
Tower Semiconductor reported second quarter 2025 revenues of $372 million, a 6% year-over-year increase and a 4% quarter-over-quarter increase. Net profit was $46.6 million, also showing a $7 million increase quarter-over-quarter.
Future Revenue Growth Guidance
The company guides for third quarter revenues of $395 million, with expectations of a $40 million-plus increase for the fourth quarter over the third quarter.
RF Infrastructure Business Growth
RF infrastructure represented 25% of corporate revenues, over $90 million, up from 14% in the same period of 2024, with expectations of further significant increases.
Silicon Photonics and Silicon Germanium Advancements
The company began volume production shipments for Tier 1 customers, with a substantial capacity increase in this growing market.
Sensor and Display Revenue Increase
Expected a 20% revenue increase in the second half of 2025 for sensors and displays, due to increases in the machine vision market.
Strong Financial Position
Tower Semiconductor's balance sheet remains strong with total assets of $3.2 billion and shareholders' equity reaching a record of $2.8 billion.
Negative Updates
Underutilization of Certain Facilities
Fab 2 in Israel and Fab 9 in Texas operated at about 60% utilization while undergoing repurposing for Silicon Photonics and Silicon Germanium manufacturing.
RF Mobile Business Previous Weakness
Although improving, the RF mobile business had seen previous weakness due to inventory corrections after a strong 2024.
Company Guidance
During the Tower Semiconductor Second Quarter 2025 Earnings Conference Call, CEO Russell Ellwanger provided guidance indicating strong anticipated growth in the upcoming quarters. The company expects third-quarter revenues to reach $395 million, plus or minus 5%, with a projected $40 million increase for the fourth quarter, forecasting sequential growth and acceleration in the second half of the year. This projection aligns with Tower's strategy of expanding capacity in RF infrastructure, specifically Silicon Germanium and Silicon Photonics, which contributed significantly to the second quarter's $372 million revenue and $46.6 million net profit. Notably, the RF infrastructure business, driven by data center and AI expansions, accounted for 25% of corporate revenues, marking a rise from 14% in 2024. Additionally, Tower anticipates continued growth in its Silicon Photonics offerings, expecting increased demand for higher-speed transceivers and enhanced performance products, as evidenced by the 5x increase in SiPho products moving from pre-production to production compared to the previous year. Overall, Tower Semiconductor is positioned for sustained growth, supported by strategic investments in capacity and technological advancements to meet rising customer demand.Tower Financial Statement Overview
Summary
Tower Semiconductor demonstrates strong financial health with consistent revenue growth and solid profitability margins. The balance sheet is robust, characterized by low leverage and efficient equity utilization. However, cash flow management poses a risk, with declining free cash flow growth requiring attention.Income Statement
Tower's income statement shows a strong performance with a consistent revenue growth trend, particularly in the TTM period with a 1.42% increase. The company maintains healthy margins, with a gross profit margin of 23.18% and a net profit margin of 13.86% in the TTM. However, there is a slight decline in gross profit margin compared to previous years, indicating potential cost pressures.78
Positive
Balance Sheet
The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.06, indicating conservative leverage. The return on equity is stable at 7.74% in the TTM, showing efficient use of equity. The equity ratio is strong, suggesting a robust capital structure with a high proportion of equity financing.82
Very Positive
Cash Flow
Cash flow analysis reveals challenges, with a significant decline in free cash flow growth rate (-91.51%) in the TTM. The operating cash flow to net income ratio remains healthy at 1.73, indicating good cash generation relative to net income. However, the negative free cash flow to net income ratio highlights potential cash management issues.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.49B | 1.44B | 1.42B | 1.68B | 1.51B | 1.27B |
| Gross Profit | 333.11M | 339.44M | 353.52M | 466.31M | 329.12M | 233.32M |
| EBITDA | 487.97M | 451.32M | 851.12M | 594.75M | 437.22M | 331.56M |
| Net Income | 196.48M | 207.86M | 518.49M | 264.57M | 150.01M | 82.30M |
Balance Sheet | ||||||
| Total Assets | 3.20B | 3.08B | 2.92B | 2.55B | 2.23B | 2.09B |
| Cash, Cash Equivalents and Short-Term Investments | 1.21B | 1.22B | 1.24B | 1.01B | 764.65M | 710.88M |
| Total Debt | 176.10M | 180.81M | 231.56M | 272.34M | 314.84M | 390.28M |
| Total Liabilities | 428.97M | 440.31M | 491.48M | 659.07M | 615.85M | 639.25M |
| Stockholders Equity | 2.77B | 2.65B | 2.43B | 1.90B | 1.62B | 1.46B |
Cash Flow | ||||||
| Free Cash Flow | -1.06M | 12.53M | 232.06M | 316.28M | 107.48M | -37.09M |
| Operating Cash Flow | 443.12M | 448.68M | 676.56M | 529.82M | 421.29M | 276.56M |
| Investing Cash Flow | -412.55M | -400.24M | -720.85M | -329.45M | -338.94M | -363.61M |
| Financing Cash Flow | -35.48M | -32.45M | -30.41M | -66.65M | -76.86M | -61.19M |
Tower Technical Analysis
Positive
63.21
Price Trends
49.51
Positive
44.24
Positive
44.84
Positive
Market Momentum
4.14
Negative
75.25
Negative
90.30
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSEM, the sentiment is Positive. The current price of 63.21 is above the 20-day moving average (MA) of 54.07, above the 50-day MA of 49.51, and above the 200-day MA of 44.84, indicating a bullish trend. The MACD of 4.14 indicates Negative momentum. The RSI at 75.25 is Negative, neither overbought nor oversold. The STOCH value of 90.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSEM.
Tower Risk Analysis
Tower disclosed 43 risk factors in its most recent earnings report. Tower reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tower Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $7.39B | 34.29 | 24.23% | ― | 43.69% | 51.22% | |
78 Outperform | $6.88B | 28.24 | 15.07% | 1.18% | 6.23% | 10.12% | |
76 Outperform | $6.00B | 19.42 | 7.37% | 2.99% | -1.20% | -19.46% | |
73 Outperform | $7.04B | 36.20 | 7.41% | ― | 7.18% | -60.59% | |
65 Neutral | $5.01B | 245.36 | 11.57% | ― | 22.22% | ― | |
61 Neutral | $35.52B | 8.84 | -11.04% | 1.87% | 8.55% | -8.14% | |
61 Neutral | $5.99B | ― | -9.17% | ― | 65.12% | 15.46% |
* Technology Sector Average
Performance Comparison
TSEM
Tower
63.21
22.65
55.84%
AMKR
Amkor
24.64
-3.02
-10.92%
NVMI
Nova
255.70
58.50
29.67%
SMTC
Semtech
60.67
21.21
53.75%
OLED
Universal Display
145.39
-37.33
-20.43%
SITM
SiTime Corporation
234.77
104.23
79.85%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.