Tower Semiconductor: Q1 Profits Plummet 62% to $33.99M

Recently, Tower Semiconductor unveiled its financial performance for the first quarter of 2024. Despite facing challenges, the company demonstrated resilience with revenue reaching $327 million, slightly surpassing analysts' projections of $324.5 million. This marked a decline from the previous year, attributed to weakened demand in industrial and automotive sectors due to economic factors.

The gross margin for the quarter decreased to 22.2%, reflecting a shift of 4.73 percentage points from the same period last year. Operating profit also experienced a significant drop, standing at $33.99 million, a 62% decrease compared to the previous year. Diluted earnings per share, excluding one-time gains, were $0.46, surpassing analysts' consensus of $0.39, albeit lower than the $0.55 reported in the same period last year.

Despite these challenges, Tower Semiconductor remains optimistic about market recovery and anticipates a return to a positive growth trajectory in the second quarter, with accelerated growth expected in the latter half of the year.

CEO Russell Ellwanger acknowledged the broader semiconductor industry downturn, affecting performance across various application markets. Notably, the automotive chip sector experienced a significant decrease in demand, primarily due to global economic slowdown. The data center chip segment was also affected by inventory adjustments, as customers destocked inventory accumulated during the pandemic, requiring a period for normalization.

Looking ahead to the second quarter, Tower Semiconductor forecasts revenue to reach $350 million, with a fluctuation margin of 5% and a sequential growth rate exceeding 7%, surpassing analysts' expectations.