• Revenue: $371 million for Q3 2024, a 6% quarter-over-quarter and 3.5% year-over-year growth.
• Net Profit: $55 million, representing a net margin of 15%.
• Gross Profit: $93 million for Q3 2024.
• Operating Profit: $56 million for Q3 2024.
• RF Infrastructure Revenue: Approximately 18% of corporate revenues in Q3 2024, nearly doubling year-over-year.
• Silicon Photonics Revenue: Expected $100 million for 2024, with a forecasted annualized Q4 2024 run rate of over $150 million.
• RF Mobile Market Revenue: Approximately 26% of corporate revenues in Q3 2024.
• Power Business Revenue: 17% of corporate revenues in Q3 2024.
• Sensors and Displays Revenue: 14% of corporate revenues in Q3 2024.
• Balance Sheet Assets: $3.1 billion as of September 2024.
• Shareholders' Equity: $2.6 billion at the end of September 2024.
• CapEx Investments: $500 million for Agrate fab, $300 million for Intel's New Mexico fab, and $350 million for SiPho and SiGe capacity expansion.

• Warning! GuruFocus has detected 5 Warning Sign with TSEM.

Release Date: November 13, 2024

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

Positive Points

• Tower Semiconductor Ltd (NASDAQ:TSEM) reported a strong financial performance for Q3 2024, with revenue reaching $371 million, marking a 6% quarter-over-quarter and 3.5% year-over-year growth.
• The company achieved a net profit of approximately $55 million, representing a net margin of about 15%.
• Tower Semiconductor Ltd (NASDAQ:TSEM) continues to experience strong growth in its RF infrastructure business, which represented approximately 18% of corporate revenues in Q3 2024.
• The company is leading in the silicon photonics market, with expected revenue of approximately $100 million for 2024 and a forecasted annualized Q4 2024 run rate of over $150 million.
• Tower Semiconductor Ltd (NASDAQ:TSEM) is expanding its production capabilities, including a production ramp of 1.6-terabit products and investments in new capacity and technology, such as the 300-millimeter PDKs using a 65-nanometer CMOS.

Negative Points

• The imaging business remained stable rather than growing as expected, particularly in the machine vision sector.
• Fab utilization rates for some facilities were below optimal levels, with Fab 2 and Fab 9 at about 60% each.
• The RF mobile market, although representing 26% of corporate revenues, is not overly strong, with demand outpacing capacity in some areas.
• There are no long-term take-or-pay agreements in place for RFSOI capacity, which could pose a risk if customer demand fluctuates.
• The company faces potential challenges in the mobile market, with some major players not optimistic about 2025, which could impact growth in the RF mobile segment.

Q & A Highlights

Q: Can you clarify the revenue and gross profit opportunities for applications above 400 gigabit, especially regarding ASP premiums? A: Russell Ellwanger, CEO: Yes, the ASP is higher for applications above 400 gigabit, particularly for active copper cables. Most of our sales are already for 800G, which commands a good ASP due to the advanced platform used.

Q: Are you tracking above your previous silicon photonics revenue targets for 2024 and 2025? A: Russell Ellwanger, CEO: Yes, we expect to hit about $100 million in silicon photonics revenue this year, with a Q4 run rate of $150 million, indicating we are tracking above our previous forecasts.

Q: Can you explain the $350 million investment plan and its impact on your revenue model? A: Oren Shirazi, CFO: The $350 million investment is included in our long-term model to achieve $2.66 billion in annual revenue. It's necessary for expanding SiPho and SiGe capacity and capabilities.

Q: What kind of customer agreements do you have to support your SOI capacity ramp? A: Russell Ellwanger, CEO: We don't have take-or-pay agreements but rely on strong relationships and track records with customers. Our assurance comes from multi-generation roadmaps and serving customers well.

Q: Are you seeing any volatility in wafer activity due to changes in NVIDIA's platform? A: Russell Ellwanger, CEO: Yes, some wafers have been put on hold for a mask change, but it won't significantly impact our volume output.

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