Israeli semiconductor firm Tower Semiconductor is expecting a downturn in quarterly revenue, citing challenges within the chip industry as companies grapple with a supply glut, leading to corrective measures in inventory management.
The company, which specializes in manufacturing analog and mixed-signal semiconductors used primarily in automotive applications, is forecasting revenue of $350 million for its fourth quarter, indicating a decline of over 13% from the same period a year ago.
In the third quarter, Tower Semiconductor reported operating profit growth to about $362.2 million, driven by a net gain of approximately $314 million from the termination fee related to the Intel merger contract.
The company reported revenue of $358.2 million, reflecting a 16% decline from the same period in the previous year.
On an adjusted basis, Tower Semiconductor exceeded expectations, earning $0.54 per share, surpassing the analyst estimate of $0.50 per share, according to four analysts polled by LSEG.
Despite geopolitical tensions in the region, Tower Semiconductor expressed confidence in its ability to "continue seamless operations."
Tower Semiconductor plans to invest $300 million in Intel's New Mexico factory, and Intel will provide foundry services to Tower Semiconductor.
Shares of Tower Semiconductor dropped in premarket trading but regained ground throughout Monday morning to stand at $24.92 by midday, around 1.6% higher.