Tower Semiconductor (TSEM) Stock Forecast & Price Target

Tower Semiconductor Ltd highlighted significant growth within its RF Infrastructure segment, achieving a 13% sequential increase and an impressive 60% year-over-year growth in Q3, primarily driven by its Silicon Photonics and Silicon Germanium Optical Transceiver revenues. The company's Infrastructure business saw aggressive expansion, with a notable annual increase of 69% in FY24, largely attributed to the strong performance of its SiPho business, which exceeded initial targets substantially. As Tower forecasts continued growth driven by advancements in AI and increasing market share opportunities across several sectors, the positive financial outlook is supported by projected revenue growth in its specialty foundry operations over the upcoming years.

Tower Semiconductor Ltd is facing a challenging outlook due to a projected decline in its Mobile business, with expectations of a high-teens contraction through FY25, primarily attributed to weakness in the Chinese Android market. Additionally, the company's gross margin is under pressure from a costly lease extension for its Newport Beach facility, totaling $6 million per quarter, impacting overall financial performance. Furthermore, anticipated declines in average selling prices for key electronic devices may force the company to reduce its own prices, potentially leading to decreased revenues amidst a backdrop of inventory and pricing challenges in major markets such as handsets and RF SOI products.