One-glance verdict
Overvalued
$47.42 our estimate vs market $170.41
Wall Street consensus: $312.93 (560.0% higher than our fair-value estimate)
259% above our estimate, beyond the bull case
Fundamentals snapshot
Tower Semiconductor Ltd.
TSEM · NMS · Technology · Semiconductors
Current price
$170.41
52-week range
$77.04 - $319.94
Market cap
$19.34B
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 138.4% above its 5-year average P/E.
What this company does
Tower Semiconductor Ltd.
Tower Semiconductor is a specialized factory that manufactures computer chips for other companies. Businesses that design chips for products like smartphones, cars, and medical devices hire Tower to build them. This makes Tower an important link in the global supply chain (the network of companies involved in creating and distributing a product), as many popular electronics rely on its manufacturing services.
How the company got here
Tower Semiconductor was founded in 1993 in Israel, initially acquiring a fabrication facility. The company went public in 1994 and expanded its manufacturing capabilities with new facilities over the years. A significant turning point was the 2008 acquisition of Jazz Semiconductor, which broadened its U.S. presence and strengthened its expertise in analog and radio frequency (RF) technologies. This strategic move helped reshape the company, which was known as TowerJazz for a period before rebranding back to Tower Semiconductor. More recently, the company has focused on strategic partnerships and capacity expansions, including a joint venture in Japan and collaborations in Italy, to enhance its global manufacturing footprint and technological offerings.
What it actually does
Tower Semiconductor is a "foundry," which means it manufactures computer chips (also called integrated circuits or ICs) based on designs created by other companies. Think of it like a specialized factory that builds components for other businesses rather than selling its own branded products directly to consumers. These chips are essential building blocks for a vast array of electronic devices we use every day. Tower focuses on "specialty" chips, meaning they are designed for specific functions rather than general-purpose computing, and are used in markets like communication, automotive, industrial, and medical devices.
Analog Semiconductor Solutions
This is Tower Semiconductor's primary business. They manufacture analog chips, which are different from the digital chips found in most computers. Analog chips are used to process real-world signals, like sound or temperature, and convert them into digital information that computers can understand, or vice versa. Tower offers a wide range of these specialized analog technologies, including those for radio frequency (RF) applications (used in wireless communication), high-performance analog (HPA) for complex signal processing, and integrated power management chips that control the flow of electricity in devices. These chips are crucial for everything from smartphones and Wi-Fi routers to car electronics and medical equipment.
CMOS Image Sensors (CIS) and Non-Imaging Sensors (NIS)
This part of Tower's business focuses on manufacturing chips that act as the "eyes" for electronic devices. CMOS image sensors are the technology behind the cameras in your smartphone, digital cameras, and security systems, capturing light and converting it into digital images. Non-imaging sensors are used for various sensing applications beyond just capturing visual data, such as detecting motion, pressure, or temperature. These sensors are vital for a wide range of products, from automotive safety systems to industrial monitoring and consumer electronics.
Integrated Power Management (BCD)
This segment produces chips that are essential for managing and controlling electrical power within electronic devices. Power management integrated circuits (PMICs) are like the traffic cops for electricity, ensuring that components receive the right amount of power at the right time, which is critical for efficiency and preventing damage. Bipolar-CMOS-DMOS (BCD) technology is a specialized type of power management that allows for high-voltage and high-power applications. These chips are particularly important in the automotive industry for electric vehicles and in industrial applications where robust power control is needed.
Silicon Photonics (SiPho) and Silicon Germanium (SiGe)
This is a more advanced area where Tower is expanding its capabilities. Silicon photonics involves using light to transmit data, which can be much faster and more efficient than traditional electrical signals. This technology is becoming increasingly important for high-speed communication, data centers, and artificial intelligence (AI) applications. Silicon Germanium (SiGe) is another specialized material used to create high-performance chips, particularly for radio frequency (RF) applications, offering advantages in speed and efficiency for wireless communication and high-frequency electronics.
What management is betting on now
Tower Semiconductor's management is focused on expanding its capacity in specialized chip manufacturing, particularly in areas like silicon photonics and silicon germanium. They are investing heavily in Japan to boost production for AI and data center needs, recognizing the growing demand for faster and more efficient data transmission. The company is also prioritizing deepening its expertise in existing specialty areas like analog and power management chips, aiming to be a go-to partner for companies needing highly customized and reliable semiconductor solutions. This strategy emphasizes differentiation and long-term partnerships over competing in the high-volume, leading-edge chip market.
Price history
How the share price has moved
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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 $47.42 vs current price $170.41
Wall Street consensus is the average analyst price target: $312.93 (560.0% higher than our fair-value estimate).
Our most-likely fair value is $47.42 a share — about 72.2% below today's price of $170.41, 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 $1.95B 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 138.4% 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)
67.36x
Forward P/E
25.39x
P/B
6.24x
P/S
11.32x
EV/EBITDA
29.45x
PEG ratio
3.43x
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
2.53
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
0.0%
Payout ratio
0.0%
Last ex-div date
1997-09-24