One-glance verdict
Overvalued
$60.25 our estimate vs market $266.78
Wall Street consensus: $313.83 (420.9% higher than our fair-value estimate)
343% above our estimate, beyond the bull case
Fundamentals snapshot
Tower Semiconductor Ltd.
TSEM · NMS · Technology · Semiconductors
Current price
$266.78
52-week range
$37.48 - $302.86
Market cap
$31.74B
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
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 9.1% last year.
- Reward Returns 8.7% on equity, ahead of 33% of its peers.
- Risk Stock trades 335.2% above its 5-year average P/E.
- Risk Insider ownership is only 0.5% (peer median: 12.7%).
What this company does
Tower Semiconductor Ltd.
Tower Semiconductor is a contract manufacturer that builds the specialized computer chips that other companies design. It primarily makes money by producing these custom chips for clients who put them into products like cars, smartphones, and medical equipment. This is a critical role in the global electronics supply chain (the network of companies involved in creating and distributing a product), as it allows innovative companies to create new technology without having to build their own expensive factories.
How the company got here
Tower Semiconductor started in 1993 in Israel, taking over a factory from another company called National Semiconductor. It became a public company, meaning people could buy its stock, a year later. A major turning point was in 2008 when it bought Jazz Semiconductor, which gave it a bigger presence in the United States and more advanced technology. Over the years, it grew by partnering with other big names like Panasonic and STMicroelectronics to share manufacturing plants and expand its capabilities. In 2022, the giant chipmaker Intel announced it would buy Tower, but the deal was called off in 2023 because they couldn't get approval from regulators.
What it actually does
Tower Semiconductor is a special type of manufacturer called a 'foundry,' which means it's a factory for hire that makes computer chips designed by other companies. Instead of making the most advanced digital chips for computers and smartphones, Tower focuses on 'analog' chips. These special chips are essential for interacting with the real world, doing things like managing power in an electric car, sending and receiving radio signals for your phone's 5G connection, or capturing light to create an image in a high-end camera. So, while you won't see a 'Tower' brand on a chip, their work is inside many electronics in the automotive, industrial, medical, and communications industries.
Radio Frequency & High-Performance Analog
This is one of Tower's most important businesses, making chips that send and receive wireless signals. Think of the components in your smartphone that connect to 5G networks, or the systems in cars that enable features like radar and in-car Wi-Fi. Companies that design these high-speed communication systems pay Tower to manufacture the specialized chips that can handle radio waves and light signals efficiently. This segment is a major part of the company and is growing thanks to the need for faster connectivity in everything from data centers (the huge computer warehouses that power the internet) to cars.
Power Management
This part of the company builds chips that control and manage electricity within electronic devices. For example, these chips help electric vehicles use their batteries efficiently, manage the power inside large data centers, or make sure your phone charger delivers the right amount of energy. Customers are companies building everything from electric cars and industrial motors to consumer gadgets. They rely on Tower to produce durable and efficient chips that can handle different levels of electricity, which is a steady and significant source of business for the company.
Sensors & Displays
This business focuses on making chips that can 'see' or 'sense' the world around them. This includes high-quality CMOS image sensors (the technology that captures light in digital cameras) for professional photography, medical imaging devices, and advanced car safety systems. It also produces non-imaging sensors, like those used for fingerprint scanners on phones or tiny mechanical sensors (known as MEMS) used in microphones. Companies in the automotive, medical, and high-end camera industries are the main customers here.
Mixed-Signal / CMOS
This segment creates chips that combine both 'analog' and 'digital' functions on a single piece of silicon. Analog signals are real-world signals like sound or radio waves, while digital signals are the simple on/off language of computers. These chips act as translators between the real world and the digital world. You might find them in audio equipment, Wi-Fi routers, and all sorts of 'Internet of Things' (IoT) devices that need to process real-world information and compute with it. This is a foundational business for Tower, serving a very wide range of customers across many industries.
What management is betting on now
Management is focused on expanding its manufacturing capacity for more advanced chips, particularly on larger 300mm silicon wafers (a thin slice of semiconductor material that chips are built on), which are more cost-effective. After a planned sale to Intel fell through, Tower entered a partnership where it will use space in an Intel factory in New Mexico to install its own equipment. This 'capital-light' strategy allows Tower to grow without the massive cost of building a new factory from scratch. The company is targeting high-growth markets like silicon photonics (using light to move data in AI and data centers), power management chips for electric vehicles, and advanced RF (radio frequency) chips for 5G communications.
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 $60.25 vs current price $266.78
Wall Street consensus is the average analyst price target: $313.83 (420.9% higher than our fair-value estimate).
Our most-likely fair value is $60.25 a share — about 77.4% below today's price of $266.78, 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 $155.86M Interest coverage 53.08x This is the baseline the peer rows are being compared against.
Total debt $2.78B Interest coverage 5.87x -89% vs TSEM Carries about 9.0x less debt cushion than TSEM.
Total debt $238.32M 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
3 Risks
Rewards
-
Revenue grew 9.1% last year.
-
Returns 8.7% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Stock trades 335.2% above its 5-year average P/E.
-
Insider ownership is only 0.5% (peer median: 12.7%).
-
Operating margin compressed from 18.0% to 15.6% over 3 years.
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)
122.94x
Forward P/E
46.49x
P/B
10.28x
P/S
19.58x
EV/EBITDA
51.59x
PEG ratio
7.44x
Profitability
How much profit each dollar creates
Gross margin
24.8%
Operating margin
15.6%
Net margin
15.1%
ROE
8.7%
ROA
4.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.05x
Current ratio
5.63x
Quick ratio
4.75x
Total debt
$155.86M
Total cash
$1.50B
Growth
How the business has been compounding
Revenue TTM
$6.10B
Revenue 5Y CAGR
0.9%
EPS TTM
2.17
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