Tower Semiconductor's Q4 revenue drops on softening demand for auto chips (updated)

Tower Semiconductor

14/02/2024 16:04

(Adds CEO comments, share reaction)
       Feb 14 (Reuters) - Israel-based contract chipmaker Tower
Semiconductor  TSEM.O  posted a decline in its fourth-quarter
revenue on Wednesday, hurt by uncertainty in demand from the
automotive sector.
    The company said the Israel-Hamas war was not impacting its
operations or its supply chain.
        Its Nasdaq-listed shares were up 8.1% at $30.95 in
morning trade.
        Various chipmakers in their latest quarterly earnings
have signaled the beginning of a supply glut in the automotive
sector, that is likely to weigh on demand for companies such as
Tower Semiconductor.
    European chipmaker STMicroelectronics  STMPA.PA  also
forecast a more than 15% drop in its first-quarter revenue in
January, due to softer automotive demand.
    Tower Semiconductor, which makes analog and mixed-signal
chips used mainly in automotives, reported revenue of $351.7
million for the three months ended Dec. 31, down more than 12%
year-on-year.
    The company will phase out certain lower margin products, it
said, without providing further details.
    It said both its facilities in Hokuriku, Japan suffered
tools damage, some "work in progress" was hit and operations
temporarily halted in the aftermath of an earthquake on Jan. 1.
Both factories have since returned to full operations, it added.
    Tower forecast its first-quarter revenue at $325 million,
with an upward or downward range of 5%.
    It posted adjusted profit of 55 cents per share for the
fourth quarter. Four analysts polled by LSEG pegged earnings at
52 cents per share.
    CEO Russell Ellwanger said despite the earthquake in Japan
during the quarter, Tower still managed to beat profit and
revenue estimates although they would have been higher if not
for the natural disaster. He also said in 2024, the company
expects notable quarter over quarter growth throughout the year.
    During 2023, Intel  INTC.O  terminated its planned $5.4
billon acquisition of Tower. But Ellwanger said it was able to
sign a deal for high capacity at an Intel-owned factory in New
Mexico to produce 65 nanometer chip flows for power management.
    Customer prototypes will be available in the second half of
2024, he told Reuters. "We were able to build off (the Intel
termination) very well," Ellwanger said. But "if the deal had
happened, I think there's other things that we could have done
that otherwise we're not doing now." 
        
  
        
  
         
  

 (Reporting by Arsheeya Bajwa in Bengaluru and Steven Scheer in
Jerusalem; Editing by Shilpi Majumdar and Ros Russell)
 ((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))