By Lisa Thompson

NASDAQ:TSEM

READ THE FULL TSEM RESEARCH REPORT

While down sequentially due to typical seasonality, Tower (NASDAQ:TSEM) continued year-over-year revenue growth in Q1 2025 and expects that to continue sequentially and year-over-year throughout 2025. Capacity coming online in Italy, Texas, and Japan will cause revenues to increase markedly in the second half. The company expects much better results in 2025 as RF infrastructure and Power Management continue to grow rapidly. Lightcounting calls for the CAGR of Silicon Photonics to be 49% per year over the next few years, and Tower believes it commands 80% of that market. SiPho contributed $105 million in revenues in 2024, management expects to double in 2025. The handset is predicted to be flat in 2025, but Tower still expects its business to grow, particularly due to its envelope tracking power management product.

For Q2, Tower guided to revenues of $372 million plus or minus 5%, which would result in continued year-over-year growth. Despite much discussion, the company has seen no effect on business due to current or pending US or reciprocal tariffs. Very little, if any of Tower’s revenues, come from products shipped into the US; most are shipped elsewhere in Asia for final assembly into end-user devices. As of last night’s closing price, the company trades at an enterprise value of $3.5 billion, or 2.4 times EV to estimated sales for 2025, versus its peers, who trade at 5.0 times.

During the Quarter

On March 10th, Tower and Innolight announced expanded collaboration using Tower’s newest Silicon Photonics (SiPho) platform. This technology cuts the number of lasers required per module by half.

On March 12th, OpenLight and Tower announced the successful demonstration of the 400G/lane modulator on Tower’s platform. This enables a commercially viable path for both DR8 and FR4 next-generation 3.2 Tb solutions and beyond. Currently, pure silicon-based modulators are unable to support bit rates of 400G. This 400G modulator is a drop-in replacement for existing 200G modulator PASIC designs.

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