• Annual Revenue 2024: $1.44 billion.
• Net Profit 2024: $208 million.
• Q4 Revenue 2024: $387 million, 10% year-over-year growth.
• Q1 2025 Revenue Guidance: $385 million 5%, representing 10% year-over-year growth.
• RF Infrastructure Revenue 2024: $241 million, 17% of corporate revenue.
• SiPho Revenue 2024: $105 million, more than tripled from 2023.
• RF Mobile Revenue 2024: $418 million, 29% of corporate revenue.
• Power Management and Discrete Revenue 2024: $426 million, 36% of corporate revenue.
• Sensor and Display Revenue 2024: $221 million, 15% of corporate revenue.
• Mixed Signal and CMOS Revenue 2024: $105 million, 7% of corporate revenue.
• Gross Profit Q4 2024: $87 million.
• Operating Profit Q4 2024: $46 million.
• Net Profit Q4 2024: $55 million, $0.49 basic and diluted EPS.
• Gross Profit 2024: $339 million.
• Operating Profit 2024: $191 million.
• Tax Rate 2024: 5% for the full year, 4% for Q4.
• Balance Sheet Assets End of 2024: $3.1 billion.
• Shareholders' Equity End of 2024: $2.64 billion.
• CapEx Investments: $300 million in New Mexico, $500 million in Italy, $350 million for 5G capacity expansion.

• Warning! GuruFocus has detected 4 Warning Sign with TSEM.

Release Date: February 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tower Semiconductor Ltd (NASDAQ:TSEM) reported an annual revenue of $1.44 billion for 2024, with a net profit of $208 million, indicating strong financial performance.
• The company achieved a 10% year-over-year growth in Q4 2024 revenue, demonstrating consistent quarterly growth throughout the year.
• Tower Semiconductor Ltd (NASDAQ:TSEM) is targeting strong growth in RF infrastructure revenue for 2025, building on a near doubling in 2024 over 2023.
• The company is investing $350 million to expand SiGe and SiPho capacity, indicating a commitment to meeting growing customer demand.
• Tower Semiconductor Ltd (NASDAQ:TSEM) has successfully transferred its Advanced 65nm BCD platform to Albuquerque, achieving a major milestone ahead of plan.

Negative Points

• The company anticipates a decrease in RF mobile revenue in 2025 due to weaker customer forecasts, particularly for Android-based devices.
• Discrete business is expected to decrease in 2025 due to the discontinuation of lower margin, legacy 150mm activities.
• Utilization rates in several fabs are relatively low, with Fab 2 and Fab 9 operating at approximately 55% utilization.
• The company faces headwinds from added fixed costs and depreciation following the commencement of operations in the Agra twelve-inch fab facility.
• Tower Semiconductor Ltd (NASDAQ:TSEM) expects a reduction in the RF mobile business by the upper 10s percentage, indicating potential challenges in this segment.

Q & A Highlights

Q: Can you provide insights on the expected contraction in the mobile market, particularly regarding Android and Apple customers? A: Russell Ellwanger, CEO: We don't foresee any reduction in our supply to Apple. However, for Android, particularly in Asia, forecasts are down, though not significantly. We expect a reduction in the RF mobile business in the upper teens percentage-wise, but we anticipate growth in high-end 300mm activities this year.

Q: Could you elaborate on the margin contraction this quarter and its impact for the rest of the year? A: Oren Shirazi, CFO: We don't expect additional headwinds for the rest of the year. The Q4 2024 results already include all headwinds, and we anticipate a 50% incremental margin model moving forward. The difference in expected gross margin was mainly due to these headwinds.

Q: What segments do you expect to perform above or below seasonality in Q1 2025? A: Russell Ellwanger, CEO: SiGe and SiPho are expected to perform above seasonality. Mixed signal and power segments are stable, while CIS is slightly stronger. The biggest seasonality impact is within the mobile segment.

Q: Can you provide more details on the growth expectations for the RF infrastructure business and the role of silicon photonics (SiPho)? A: Russell Ellwanger, CEO: SiPho started gaining market share at 400G and 800G, with benefits extending to 100G. The growth in RF infrastructure is expected to continue, driven by demand for advanced components in data centers. SiPho's market entry at higher speeds is a significant growth driver.

Q: How do you expect the shift from 200mm to 300mm wafers to impact your business model? A: Russell Ellwanger, CEO: The shift to 300mm wafers results in higher selling prices and substrate costs, with similar margin impacts but higher revenue. The integration of advanced components at 300mm can drive higher incremental margins, aligning with our $2.7 billion revenue model.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.