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1. Company Snapshot

1.a. Company Description

Tower 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.

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1.b. Last Insights on TSEM

Tower Semiconductor's recent performance was driven by strong Q3 results, beating sales and earnings expectations. The company's guidance for Q4 suggests substantial growth acceleration. Institutional investors, such as G2 Investment Partners Management, have increased their stakes, with a purchase of 175,000 shares. Analysts have boosted their forecasts following the upbeat Q3 results. Additionally, the company's Silicon Photonics chips are in high demand, particularly in data center applications, amid constrained supply.

1.c. Company Highlights

2. Tower Semiconductor's Q3 2025 Earnings: A Strong Performance

Tower Semiconductor reported a robust third-quarter 2025, with revenue reaching $396 million, a 7% year-over-year increase and 6% quarter-over-quarter growth. This strong performance resulted in a net profit of $54 million. The company's gross profit was $93 million, 16% higher than the previous quarter, with operating profit of $51 million and earnings per share of $0.55, in line with estimates. The company's guidance for the fourth quarter is equally impressive, with expected record revenue of $440 million driven by growth in its RF infrastructure, silicon photonics, and silicon germanium businesses.

Publication Date: Nov -15

📋 Highlights
  • Q3 2025 Revenue Growth:: Revenue reached $396 million, reflecting 7% YoY and 6% QoQ growth, resulting in a $54 million net profit.
  • Q4 2025 Revenue Guidance:: Expects record $440 million, driven by RF infrastructure ($107 million, 75% annual growth) and silicon photonics ($52 million, 70% YoY growth).
  • SiPho Capacity Expansion:: Invested $350 million, with $300 million additional planned, to triple capacity by H2 2026, targeting $900 million in SiPho revenue by 2026.
  • Gross Profit & Margin Improvements:: Q3 gross profit hit $93 million (16% QoQ growth), with 50% incremental margin, despite CapEx depreciation impacts.
  • Strong Balance Sheet & Strategic Position:: $3 billion in assets, $2.8 billion in equity, and leadership in SiPho with 30% of starts on 1.6Gbps platform, securing long-term customer stickiness.

Segment Performance

The RF infrastructure revenue grew to $107 million, a significant increase that is expected to result in a 75% growth for the full year. Silicon photonics revenue also saw a substantial 70% year-over-year growth to $52 million, with a target of above $220 million for 2025 and a Q4 2025 annualized revenue run rate exceeding $320 million. The company's investment in capacity expansion, including $350 million already invested and an additional $300 million allocated for further silicon photonics and silicon germanium capacity growth, is expected to drive future growth.

Growth Prospects

The company is well-positioned for long-term growth, driven by the increasing demand for silicon photonics, with 30% of its starts dedicated to the 1.6 gigabit platform. The shift to silicon photonics is seen as permanent, driven by its cost and performance benefits. The company's leadership in silicon photonics, with strong relationships with customers, is expected to maintain its market position. Revenue from silicon photonics is gated by capacity, but demand is strong if the company can build it.

Valuation

With a P/E Ratio of 58.68 and an EV/EBITDA of 22.81, the company's valuation suggests that investors are pricing in significant growth prospects. The ROE of 7.29% and ROIC of 5.3% indicate a reasonable return on equity and invested capital. Analysts estimate next year's revenue growth at 18.1%, which may be challenging to achieve given the current valuation multiples.

Outlook

The company is excited to update investors on its progress, particularly with the SiPho and SiGe growth, which is expected to more than triple its capacity. This expansion, driven by customer demand, is expected to accelerate revenue growth and bring forward the timeline for reaching certain revenue levels. The CapEx investment in SiPho is accretive, with a half-year ROI from the time wafers are shipped.

3. NewsRoom

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Tower Semiconductor to Attend the Barclays 23rd Annual Global Technology Conference

Dec -03

Source: globenewswire.com

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G2 Investment Bets Big On Tower Semiconductor (TSEM) With a Purchase of 175,000 Shares

Dec -02

Source: fool.com

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Tower Semiconductor (NASDAQ:TSEM) Reaches New 12-Month High – Still a Buy?

Nov -30

Source: defenseworld.net

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Boston Partners Sells 258,047 Shares of Tower Semiconductor Ltd. $TSEM

Nov -29

Source: defenseworld.net

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Touchstone Small Company Fund Q3 2025 Performance Review

Nov -27

Source: seekingalpha.com

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Katamaran Capital Loads Up on Tower Semiconductor Stock, Buying 74,000 Shares

Nov -19

Source: fool.com

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Tower Semiconductor and Switch Semiconductor Collaborate to Deliver Best-in-Class Efficiency for Next-Generation AI and Server Power Systems

Nov -17

Source: globenewswire.com

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Critical Review: Lam Research (NASDAQ:LRCX) vs. Tower Semiconductor (NASDAQ:TSEM)

Nov -17

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.00%)

6. Segments

Integrated Circuits

Expected Growth: 6%

Tower Semiconductor's Integrated Circuits segment growth is driven by increasing demand for 5G infrastructure, IoT devices, and autonomous vehicles, which rely heavily on advanced semiconductor technology. Additionally, the company's focus on specialty analog foundry services and its strong relationships with leading OEMs contribute to its growth momentum.

7. Detailed Products

Analog ICs

Tower Semiconductor Ltd. offers a wide range of analog ICs, including power management, audio, and interface products, designed to provide high performance and low power consumption.

Image Sensors

Tower Semiconductor Ltd. provides high-quality image sensors for various applications, including camera modules, surveillance systems, and medical imaging devices.

Power Management ICs

Tower Semiconductor Ltd. offers a range of power management ICs, including voltage regulators, power amplifiers, and battery management systems.

Radio Frequency (RF) and Microwave

Tower Semiconductor Ltd. provides RF and microwave solutions for wireless communication systems, including amplifiers, switches, and filters.

Sensor and Actuator ICs

Tower Semiconductor Ltd. offers a range of sensor and actuator ICs, including temperature, pressure, and motion sensors, as well as haptic drivers and LED drivers.

CMOS Image Sensors

Tower Semiconductor Ltd. provides high-performance CMOS image sensors for various applications, including camera modules, surveillance systems, and medical imaging devices.

Display Drivers

Tower Semiconductor Ltd. offers display drivers for various display technologies, including LCD, OLED, and micro-LED displays.

8. Tower Semiconductor Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Tower Semiconductor Ltd. has a moderate threat of substitutes due to the availability of alternative semiconductor manufacturing technologies.

Bargaining Power Of Customers

Tower Semiconductor Ltd. has a low bargaining power of customers due to its strong relationships with major customers and its ability to provide customized solutions.

Bargaining Power Of Suppliers

Tower Semiconductor Ltd. has a moderate bargaining power of suppliers due to its dependence on a few key suppliers for raw materials and equipment.

Threat Of New Entrants

Tower Semiconductor Ltd. has a high threat of new entrants due to the increasing demand for semiconductor manufacturing services and the relatively low barriers to entry.

Intensity Of Rivalry

Tower Semiconductor Ltd. operates in a highly competitive industry with intense rivalry among established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.71%
Debt Cost 3.95%
Equity Weight 94.29%
Equity Cost 8.58%
WACC 8.32%
Leverage 6.06%

11. Quality Control: Tower Semiconductor Ltd. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Melexis

A-Score: 5.1/10

Value: 2.7

Growth: 6.6

Quality: 6.7

Yield: 7.5

Momentum: 3.5

Volatility: 3.7

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Quality: 8.3

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Momentum: 7.5

Volatility: 1.0

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A-Score: 4.5/10

Value: 0.2

Growth: 8.9

Quality: 8.4

Yield: 0.0

Momentum: 8.5

Volatility: 1.0

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A-Score: 4.2/10

Value: 0.0

Growth: 4.7

Quality: 7.6

Yield: 5.0

Momentum: 6.5

Volatility: 1.7

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A-Score: 4.2/10

Value: 4.9

Growth: 7.0

Quality: 6.8

Yield: 1.2

Momentum: 4.0

Volatility: 1.3

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Tower Semi

A-Score: 4.2/10

Value: 3.3

Growth: 5.0

Quality: 5.5

Yield: 0.0

Momentum: 9.5

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

114.01$

Current Price

114.01$

Potential

-0.00%

Expected Cash-Flows