Tower’s Q4 revenue falls as auto chips supply glut adds uncertainty
Tower’s Q4 revenue falls as auto chips supply glut adds uncertainty
The Israeli chipmaker said it plans to phase out certain lower margin products without providing further details
Israel-based contract chipmaker Tower Semiconductor posted a decline in its fourth-quarter revenue on Wednesday, hurt by uncertainty in demand from the automotive sector.
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 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 December 31, down more than 12% year-on-year.
The company will phase out certain lower margin products, it said without providing further details.
The company also said both its facilities in Hokuriku, Japan saw tools damaged and some "work in progress" being hit as well as a halt in operations, in the aftermath of an earthquake on January 1. Both factories have since returned to full operations, it added.
The company 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.
Earlier this week it was reported that Tower has submitted a proposal to India's government to build an $8 billion chipmaking facility in the South Asian nation.
Tower, seeking government incentives for its plan, is looking to manufacture 65 nanometre and 40 nanometre chips in India, the report said.
Tower, under the management of Russell Ellwanger, has been connected to setting up chipmaking factories in India several times over recent years. In May 2022 it was announced that it would be the main partner, responsible for technology, in a consortium of companies that would establish a $3 billion chip manufacturing plant in the country. The official announcement came three months after Intel revealed its intention to acquire Tower for $5.4 billion, a merger that ultimately fell through due to regulatory issues in China.
Tower, which currently has two plants in Migdal HaEmek, two plants in the U.S. and two more in Japan, received from Intel a cancellation fee of $375 million.
