Tower Semiconductor, a well-known contract chip manufacturer based in Israel, saw sales decline in the fourth quarter due to the unpredictable nature of automotive demand. The company reported that the recent conflict between Israel and Hamas has not had a material impact on its operations or supply chain.
Shares of the semiconductor maker on the Nasdaq rose 8.1% to $30.95 in morning trading. However, various chipmakers have recently warned of an impending oversupply in the automotive sector, impacting demand for companies like Tower Semiconductor.
For example, STMicroelectronics expects first-quarter sales to fall by more than 15% due to lower auto demand. Tower Semiconductor, which specializes in analog and mixed-signal semiconductors used primarily in automobiles, reported sales for the quarter ending Dec. 31 fell more than 12% from a year earlier to $351.7 million. revealed.
The company did not provide specific details, but announced plans to discontinue several low-margin products. In addition, Tower Semiconductor faced challenges at its facility in Hokuriku, Japan, including damaged tooling and damaged work-in-progress due to the January 1 earthquake. Nevertheless, both plants have since resumed full operations.
Regarding future expectations, Tower Semiconductor expects first quarter revenue to reach approximately $325 million, allowing for a 5% increase or decrease. The company reported fourth-quarter adjusted earnings of 55 cents per share, which beat the expectations of four analysts surveyed by LSEG, who expected earnings of 52 cents per share. .
CEO Russell Ellwanger expressed satisfaction with the company's performance and emphasized that Tower Semiconductor would have achieved even greater results had it not been for the impact of the earthquake. He also shared positive expectations for strong quarterly growth through 2024.
Despite Intel's planned $5.4 billion acquisition of Tower being scrapped in 2023, Ellwanger said the company has a deal to produce 65nm chips for power management at an Intel-owned factory in New Mexico. It was revealed that it was secured from Intel. The customer's prototype is expected to be available in the second half of 2024.
FAQ section:
1. Why did Tower Semiconductor's sales decrease in the fourth quarter?
Tower Semiconductor saw sales decline in the fourth quarter due to the unpredictable nature of automotive demand. The decline in automotive demand affected demand for companies like Tower Semiconductor, which specializes in providing analog and mixed-signal semiconductors primarily used in automobiles.
2. Has the recent conflict between Israel and Hamas affected Tower Semiconductor's operations?
No, the recent conflict between Israel and Hamas has not had a material impact on Tower Semiconductor's operations or supply chain.
3. What was Tower Semiconductor's year-over-year revenue contraction for the quarter ending December 31?
Tower Semiconductor reported that revenue for the quarter ending Dec. 31 fell more than 12% year over year to $351.7 million.
4. Has Tower Semiconductor provided specific details about its plans to discontinue the product?
Tower Semiconductor did not provide specific details about its plans to discontinue some low-margin products.
5. Were there any challenges you faced at Tower Semiconductor's facility in Hokuriku, Japan?
Yes, Tower Semiconductor faced challenges at its facility in Hokuriku, Japan, including damaged tools and damaged work-in-progress after the January 1 earthquake. However, both plants have since resumed full operations.
6. What is Tower Semiconductor's future earnings forecast for the first quarter?
Tower Semiconductor expects first-quarter sales to reach approximately $325 million, allowing for a 5% increase or decrease.
7. What were Tower Semiconductor's fourth quarter earnings?
Tower Semiconductor reported fourth-quarter adjusted earnings of 55 cents per share, which beat the forecast of 52 cents per share by four analysts surveyed by LSEG.
8. What are your expectations for Tower Semiconductor's future growth?
CEO Russell Ellwanger expressed positive expectations for strong quarterly growth through 2024.
Definition:
– Contract chip manufacturer: A company that manufactures chips and semiconductor devices as a service to other companies.
– Oversupply: Too much supply of a particular product in the market. This leads to a decrease in demand and lower prices.
– Analog and mixed-signal semiconductors: Electronic components that process both analog and digital signals.
– Revenue contraction: Decrease in revenue compared to the previous period.
– Power management: The process of controlling and optimizing the power usage of electronic devices.
Related Links:
– Tower Semiconductor official website
