One-glance verdict
Overvalued
$59.50 our estimate vs market $209.28
Wall Street consensus: $314.91 (429.3% higher than our fair-value estimate)
252% above our estimate, beyond the bull case
Fundamentals snapshot
Tower Semiconductor Ltd.
TSEM · NMS · Technology · Semiconductors
Current price
$209.28
52-week range
$64.81 - $319.94
Market cap
$23.66B
Balance sheet
Healthy
53.08x Strong cushion
Net cash $1.34B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 9.1% last year.
- Reward Returns 10.0% on equity, ahead of 33% of its peers.
- Reward Free cash flow was positive in 8/10 years.
- Risk Stock trades 191.7% above its 5-year average P/E.
What this company does
Tower Semiconductor Ltd.
Tower Semiconductor operates as a foundry (a factory that makes parts for other companies), manufacturing the custom computer chips that other businesses design. The company earns money by producing these essential chips for a wide variety of products, from cars and smartphones to industrial equipment, making it a key link in the global electronics supply chain (the network of businesses that create and deliver a final product).
How the company got here
Tower Semiconductor started in Israel in 1993 by acquiring a factory that makes the silicon wafers (the building blocks of computer chips). A key turning point was buying a U.S. company called Jazz Semiconductor in 2008, which greatly expanded its capabilities in specialized chips and gave it a bigger American presence. Another major step was a 2014 joint venture with Panasonic in Japan, which added significant manufacturing capacity. For many years, the company was known as TowerJazz, but it simplified its name back to Tower Semiconductor in 2020.
What it actually does
Tower Semiconductor is a special type of chip company called a 'foundry,' which means it manufactures chips that other companies design. Think of it like a specialty workshop for electronics; companies like Apple or Nvidia design the blueprints for a chip, and a foundry like Tower builds it for them. Tower doesn't focus on the most advanced digital chips for computers and smartphones, but instead specializes in making 'analog' chips. These are the chips that help electronic devices interact with the real world by sensing light, managing power, and handling radio signals.
Radio Frequency and High-Performance Analog
This is one of Tower's most important businesses, making chips that send and receive wireless signals. These components are essential for things like 5G mobile networks, Wi-Fi, automotive radar, and connecting devices in the 'Internet of Things'. Companies that build communication systems pay Tower to manufacture these specialized chips that need to be very fast, efficient, and reliable. This area includes advanced technologies like Silicon Photonics, which uses light instead of electricity to move data, crucial for modern data centers and even quantum computing.
Power Management
This segment creates chips that control and manage electricity within electronic devices. Every device with a battery or a plug, from a smartphone to an electric car, needs these chips to work efficiently and not waste energy. Customers in the automotive, industrial, and consumer electronics industries rely on Tower to produce these components, which handle everything from converting power for a tiny sensor to managing the battery in a car.
CMOS Image Sensors
This part of the company manufactures the sensors that act as the 'eyes' for electronic devices. These are not just for the camera in your phone; they are also used in medical imaging equipment, high-end security cameras, and advanced driver-assistance systems in cars. Companies pay Tower to build these custom sensors because of their expertise in capturing high-quality images, even in difficult conditions like very low light.
Sensors and MEMS
Beyond just seeing images, this business line creates a variety of other sensors that can detect things like motion, pressure, and even specific chemicals. It also produces Micro-Electro-Mechanical Systems (MEMS), which are tiny microscopic machines with moving parts, like the accelerometers in your phone that detect when you rotate it. These components are used in a wide range of products, from industrial equipment and medical devices to consumer gadgets.
What management is betting on now
The company is heavily focused on expanding its manufacturing capabilities for more advanced and larger silicon wafers, particularly in a technology called Silicon Photonics, which is critical for the massive data centers that power AI. Management is also investing to meet the growing demand for specialized chips in the automotive market, as cars become more electric and autonomous. Their strategy is not to compete with the biggest chipmakers, but to be the go-to manufacturer for specialized analog chips that are essential for high-growth industries.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$12.53M
FY2025 Q4
$-48.94M
Revenue
$1.57B
Net income
$220.47M
Diluted EPS
1.94
Operating cash flow
$395.48M
Free cash flow
$-48.94M
Fetching…
Sources
Revenue
$1.44B
Net income
$207.86M
Diluted EPS
1.85
Operating cash flow
$448.68M
Free cash flow
$12.53M
Fetching…
Sources
Is it cheap or expensive?
Fair value $59.50 vs current price $209.28
Wall Street consensus is the average analyst price target: $314.91 (429.3% higher than our fair-value estimate).
Our most-likely fair value is $59.50 a share — about 71.6% below today's price of $209.28, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $1.3B - more cash than debt. Interest coverage 53.1x.
Net debt
$-1.34B
Interest coverage
53.08x
Tower Semiconductor Ltd.'s profit covers its interest bill about 53.1 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
TSEM
BASELINE
Tower Semiconductor Ltd.
Total debt $141.70M Interest coverage 53.08x This is the baseline the peer rows are being compared against.
Total debt $1.68B Interest coverage 15.94x -70% vs TSEM Carries about 3.3x less debt cushion than TSEM.
Total debt $2.01B Interest coverage 28.55x -46% vs TSEM Carries about 1.9x less debt cushion than TSEM.
Total debt $4.71B Interest coverage 10.59x -80% vs TSEM Carries about 5.0x less debt cushion than TSEM.
Total debt $10.98B Interest coverage 6.51x -88% vs TSEM Carries about 8.2x less debt cushion than TSEM.
Total debt $253.34M Interest coverage -0.19x -100% vs TSEM This peer has almost no interest-payment cushion compared with TSEM.
What you should know
The case for and against TSEM
3 Rewards
1 Risk
Rewards
-
Revenue grew 9.1% last year.
-
Returns 10.0% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Stock trades 191.7% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
82.40x
Forward P/E
32.04x
P/B
7.67x
P/S
13.84x
EV/EBITDA
37.12x
PEG ratio
3.37x
Profitability
How much profit each dollar creates
Gross margin
26.9%
Operating margin
19.6%
Net margin
16.9%
ROE
10.0%
ROA
5.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.05x
Current ratio
4.91x
Quick ratio
4.17x
Total debt
$141.70M
Total cash
$1.48B
Growth
How the business has been compounding
Revenue TTM
$6.10B
Revenue 5Y CAGR
0.9%
EPS TTM
2.54
EPS 5Y CAGR
-6.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.05B
Free CF TTM
$-48.94M
FCF margin
-0.8%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
1997-09-24