Israel's Tower Semiconductor forecasts quarterly revenue decline, shares fall

Tower Semiconductor

13/11/2023 13:18

Nov 13 (Reuters) - Israeli firm Tower Semiconductor
 TSEM.O  forecast a decline in quarterly revenue on Monday as
chip firms faced with a supply glut continue to correct
inventory.
    U.S.-listed shares of the contract chipmaker were down
nearly 6% in premarket trading.
    Over the past few quarters, semiconductor firms have
refrained from placing new orders as they work to clear excess
inventory built up as a result of high interest rates and sticky
inflation. 
    Tower, which makes analog and mixed-signal semiconductors
used mainly in automotives, forecast revenue of $350 million for
the fourth quarter, with a variation of 5% - down more than 13%
from a year ago. 
         Chip giant Intel  INTC.O  had terminated its plans to
acquire Tower Semiconductor in August after it was unable to get
timely regulatory approval from China for the $5.4 billion deal.
Approval from Chinese competition regulators is needed if
companies involved in a deal have a sizable business presence in
the country. 
    Operating profit for the third quarter, which included a
gain of about $314 million net from the Intel merger contract
termination fee, grew to about $362.2 million. The total
termination fee is $353 million.
    Intel will also offer foundry services to the company in a
deal that will see Tower investing $300 million in Intel's New
Mexico factory, the companies said in September. 
    Tower reported revenue of $358.2 million for the quarter
ended Sept. 30, a decline of about 16% from a year ago.
    Investors have raised concerns surrounding tech companies
operating in Israel in light of the geopolitical tensions in the
region. However, Tower has said it is placed to "continue
seamless operations". 
    On an adjusted basis, the company earned 54 cents per share
in the third quarter, beating a profit estimate of 50 cents per
share, according to four analysts polled by LSEG.

 (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Pooja
Desai)
 ((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))