Wedbush: Tower Semiconductor Ltd (TSEM.US) SiPho capacity is accelerating, Q2 revenue is expected to exceed expectations.

Wedbush Investment Bank has released a report stating that Tower Semiconductor Ltd (TSEM.US) will announce its second quarter results after the market closes on Tuesday, August 4, and is expected to exceed revenue market expectations. As the capacity for silicon photonics (SiPho) continues to ramp up, the companys prospects are expected to further clarify. Wedbush analyst Matt Bryson noted in an investor report on Monday, August 3: The certification for SiPho capacity was completed in the first quarter and will start to make a more comprehensive contribution in the second quarter. He stated that Tower Semiconductor Ltd achieved its first SiPho revenue shipments from Fab 2 and Fab 7 in the first quarter (with the initial wafer yield from Fab 7 reaching 95%), and the utilization rate of SiPho capacity at Fab 9 is currently increasing (around 80%, compared to approximately 65% in the fourth quarter of last year). With the completion of new SiPho and SiGe certifications, the utilization rate at Fab 3 is recovering to about 85%. Silicon photonics is a technology that uses light rather than electricity to transmit data. Tower Semiconductor Ltd is collaborating with Marvell Technology, Inc. (MRVL.US) to develop silicon photonic integrated circuits to meet the growing bandwidth and energy efficiency demands of data center interconnect networks. As of mid-June, the two companies had shipped over 5 million units in total. Last month, the Israeli chip manufacturer announced plans to invest approximately $3 billion to expand its advanced semiconductor manufacturing capacity in Japan, having secured about $1 billion in subsidy support from the Japanese government. This expansion aims to meet the increasing demands from AI and data center customers. Bryson pointed out: "The first path is to retrofit the Arai plant (formerly Fab 6) for producing 300mm silicon photonic products and advanced packaging, expected to achieve full-scale production by the fourth quarter of 2027 while maximizing output from Toyama Fab 7. The second path is to build a new 300mm wafer fab near Fab 7, which is expected to achieve several times the silicon photonic and silicon germanium capacity, contributing to profits starting in 2029." Tower Semiconductor Ltd is set to publish its second quarter results after the market closes on Tuesday, August 4. The market generally expects an adjusted earnings per share of $0.76 and revenues of $454.68 million. Bryson added: The revenue guidance provided by management for the second quarter is $455 million 5%, with the midpoint of the range representing a quarter-over-quarter growth of 10% and a year-over-year growth of 22%. Over the past eight quarters, Tower Semiconductor Ltd's quarterly revenue has either met or slightly exceeded the guidance midpoint (the actual revenue for the first quarter was $413.6 million, with guidance at $412 million), and we believe the possibility of breaking this pattern in the second quarter is low, especially considering that prices for key components remain favorable.