Tower Semiconductor ((TSEM)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Tower Semiconductor presented an overall positive sentiment, highlighting significant revenue growth and strategic investments that bolster optimism. Despite challenges such as the anticipated decline in RF mobile revenue and the discrete business, the company’s diverse technology platforms and robust market share growth in silicon photonics and germanium provide a solid counterbalance.
Annual Revenue and Profit Growth
Tower Semiconductor concluded 2024 with an impressive annual revenue of $1.44 billion and a net profit of $208 million. The company achieved an 18% revenue growth from Q1 to Q4 and a 10% year-over-year growth for the fourth quarter, underscoring its financial resilience and strategic direction.
Record RF Infrastructure Growth
RF Infrastructure witnessed a remarkable growth trajectory, with revenues nearly doubling in 2024 to $241 million. Additionally, SiPho revenues more than tripled to $105 million, reflecting the company’s strong performance in these key segments.
Power Management and Discrete Revenue
The power management and discrete revenue stood at $426 million in 2024. Tower Semiconductor is targeting growth in its Power Management business unit in 2025, leveraging advanced 300-millimeter platforms to drive future success.
Strategic Capacity Investments
With a clear commitment to expansion, Tower Semiconductor has earmarked $300 million for its New Mexico fab and $500 million for the Agrate, Italy fab. An additional $350 million is allocated for 5G capacity enhancement, demonstrating a strategic focus on future growth and capacity building.
Silicon Photonics and Germanium Expansion
Silicon photonics is gaining significant market share, particularly in the 400G to 800G segments, and is entering volume production at 1.6T. The silicon germanium platform is also expected to continue its growth trajectory in 2025.
RF Mobile Revenue Decline
A potential decline in RF mobile revenue is anticipated in 2025, attributed to weaker forecasts in the Android market. The company estimates a reduction in the upper teens percentage, indicating a need for strategic adjustments.
Discrete Business Expected Decrease
The discrete business is projected to decrease in 2025 due to the discontinuation of lower margin legacy 150-millimeter activities at Fab 1, reflecting a shift towards more profitable ventures.
Utilization Rates and Capacity Alignment
Operational adjustments are underway, with Fab 1 operating at 70% utilization, Fab 2 and Fab 9 at 55%, and Fab 7 at 90%. Strategic repurposing of capacities might lead to lower overall utilization rates in the short term.
Forward-Looking Guidance
Looking ahead, Tower Semiconductor projects a Q1 2025 revenue midpoint of $385 million, with a year-over-year growth of 10%. The company anticipates overall growth for 2025, driven by sequential quarter-over-quarter revenue increases, especially in the latter half of the year as capacity investments mature. Key growth areas include RF Infrastructure and SiPho, while RF Mobile may see a downturn due to Android market conditions.
In summary, the Tower Semiconductor earnings call depicted a company poised for continued growth amidst challenges. The positive sentiment is driven by strategic investments and a diversified technology portfolio, laying a robust foundation for future success. The anticipated growth in RF Infrastructure and SiPho, despite headwinds in RF Mobile and discrete businesses, highlights the company’s adaptive strategies and forward-looking vision.
