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Israel’s Tower Semiconductor forecasts quarterly revenue decline, shares fall

The logo of Israeli analog integrated circuits developer, Tower Semiconductor is seen at their offices in Migdal HaEmek, northern Israel, February 28, 2022. REUTERS/Amir Cohen/File Photo
The logo of Israeli analog integrated circuits developer, Tower Semiconductor is seen at their offices in Migdal HaEmek, northern Israel, February 28, 2022. REUTERS/Amir Cohen/File Photo

On Monday, the Israeli company Tower Semiconductor issued a projection predicting a quarterly sales decrease as semiconductor companies adjust inventory levels in response to a supply glut.

During the premarket hours in the United States, shares of the contract chipmaker listed on the NYSE were trading roughly 6% down. Due to high loan rates and persistent inflation, semiconductor companies have abstained from placing new orders over the past several quarters as they strive to reduce excess inventory that has built up as a result of previous orders.

Tower, a manufacturer of analog and mixed-signal semiconductors utilized primarily in automobiles, projected sales of $350 million for the fourth quarter, with a variation of 5%; this is a decrease of more than 13% compared to the same period in the previous year.

In August, chip giant Intel (INTC.O.) abandoned its acquisition ambitions for Tower Semiconductor because it could not secure timely regulatory permission from China for the $5.4 billion transaction. The Chinese government’s competition regulators must approve the merger agreement if the parties involved have a significant presence in the Chinese market.

The company’s profit for the third quarter increased to approximately $362.2 million, largely thanks to a gain of roughly $314 million net from the contract termination fee associated with the Intel acquisition. The entire amount due for the termination charge is 353 million dollars.

Both companies stated in September that as part of the agreement, Intel would accept Tower’s $300 million investment in Intel’s facility in New Mexico in addition to providing Tower with foundry services.

Tower reported sales of $358.2 million for the quarter that ended on September 30. This represents a decrease of around 16% compared to last year.

In light of the geopolitical difficulties plaguing the area, investors have voiced their worries regarding technology businesses based in Israel. On the other hand, Tower has stated that it is prepared to “continue seamless operations.”

According to a survey conducted by LSEG and four industry experts, the company’s adjusted earnings for the third quarter came in at 54 cents per share, above the consensus profit forecast of 50 cents per share.

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