Tower Semiconductor Ltd.

Good morning, good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Tower Semiconductor Financial Results for the third quarter of 2020 for a conference call. At this time, all participants are in listen-only mode. There will be prepared remarks followed by question and answer session, at which time, if you wish to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today. Joining us today are Mr. Russell Nwanga, CEO, and Mr. Oren Shirazi, CFO. I would now like to turn the conference over to Ms. Noit Levy, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to Tower Financial Results Conference Call for the third quarter of 2024. Before we begin, I would like to remind you that some statements made during this call may be forward-looking. and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected. These uncertainties and risk factors are fully disclosed in our Forms 20F and 6K, filed with the Securities and Exchange Commission, as well as filings with the Israeli Securities Authority. They are also available on our website. Tower assumes no obligation to update any such forward-looking statements. Please note that the third quarter of 2024 financial results have been prepared in accordance with U.S. GAAP, The financial tables and data in today's earnings release and in this earnings call also include certain adjusted financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements as established with the Securities and Exchange Commission. The financial tables include a full explanation of these measures and the reconciliation of these non-GAAP measures to the GAAP financial measures. We have a supporting slide deck that complements today's conference call. This presentation is accessible on our company's website, and it's also integrated into today's webcast for your convenience. Now, I'd like to turn the call to our CEO, Mr. Russell Elwanger. Russell, please go ahead.

Thank you, Noice. And welcome, everybody. Thank you for joining our third quarter 2024 earnings conference call, a quarter in which we delivered a strong financial performance. During this quarter, our high-speed data center offerings reached a record revenue. We've seen an increase in our customer short-term and mid-term demand for this offering that should result in an incremental dollar growth unprecedented as compared to any other product offering in our history, mainly driven by our unique offerings fulfilling AI requirements. Revenue for the third quarter reached $371 million, a 6% quarter-over-quarter and 3.5% year-over-year growth, with a net profit of approximately $55 million, representing net margin of about 15%. At year's begin, we stated a target of sequential quarterly growth, which we have achieved through the third quarter. We're pleased to guide the fourth quarter to continue this trend, with a mid-range guidance of $387 million and a range of plus-minus 5%. Suchmid Point represents about 10% Q4 versus Q4 year-over-year growth and 18% within the year growth. We continue to experience very strong growth in our RF infrastructure business, representing approximately 18% of our corporate revenues in the third quarter and close to doubling in Q3-24 over Q3-23 revenue, primarily driven by the increase in optical transceiver demand used in high-speed data communication for AI and other data center applications. We served this market with both silicon germanium for electrical amplifiers, such as transimpedium amplifiers and drivers, and with SIFO for integrated optical components, such as modulators and photodiodes. Silicon photonics continues to see rapid adoption at the higher data rates. Today, we are shipping 800 cheap products in high volume, resulting in a 2024 expected revenue of approximately $100 million for silicon photonics, this being a new growth market where Tower will have over 3x revenue growth 2024 over 2023, with a forecasted annualized Q4 24 run rate of over $150 million. As of this quarter, we've begun the production ramp of 1.6 terabit products for several lead customers. 800G products are built with eight parallel lanes of 100 gigabit per second, while 1.6T products are built with eight parallel lanes, each operating at 200 gigabit per second on our latest technology that doubles the operating speed of each component. While the component count remains similar for 800 gigabit eight lane versus 1.6T terabit eight lane, The needed performance requires continuous innovation and process technology and integration schemes to support the demanding modulation bandwidth. We believe today Tower is the number one foundry by volume in silicon photonics, and to our knowledge, also the first in production with 1.60 silicon photonics-based products. Looking forward, we continue a strong R&D partnership with lead customers towards introducing technology for 3.2 terabit that will rely again on technical innovation, enabling a doubling of speeds to 400 gigabit per second per lane. Our silicon germanium business is growing, not only due to the factors mentioned above that are growing the optical transceiver market, as both silicon germanium and silicon photonic components are built into an advanced optical transceiver, but also due to strong demand for active copper cables for short-reach interconnects. Active copper cables typically use a silicon-germanium driver or retimer to improve signal integrity at high speeds, currently 800G, to enable copper cables to be used in many short-reach applications for both performance and cost benefits as compared to optical cables. Based on the strong demand we are seeing from both our silicon-germanium and SIFO customers, we are qualifying both families of platforms, serving opposite transceivers, In our San Antonio and Migdal-Hemek 200-millimeter factories, we are optimizing existing fab space and adding substantial additional clean room for further growth. We have also released 300-millimeter PDKs using a 65-nanometer CMOS, which for silicon germanium enables customers to integrate higher density, lower power, and lower noise CMOS, supporting higher precision analog circuit application, phased array RFICs, an increasingly complex modulation scheme for communication, and for silicon photonics for lower loss components. In the RF mobile market, predominantly RF SOI, which represented approximately 26% of our corporate revenues in the third quarter of 2024, we continue to transition customers to new 300-millimeter capacity in Agrate as our demand outpaces RF SOI capacity in our WOZU 300-millimeter factory. we expect to deliver our first production revenue in Q4 to the order of a couple of tens of millions of dollars from the Agrate factory, with further ramp expected in 2025 to support the growth we are seeing in this market. In addition, we continue to prototype with customers on our most advanced platform, TPS65RSC, now available directly from Agrate as well, with customer-acknowledged industry-best R-on-C-off and power handling for next-generation RF mobile products. Our newly announced TriplePlay RF-SOI platform for Wi-Fi front-end modules that integrates the power amplifier, low-noise amplifier, and switch on a single die, which we press release with Broadcom, is in mass production and receiving strong interest from additional market leaders. Our power business, which represented 17% of our corporate revenues in the third quarter of 2024, continues to seek strong growth opportunities in our 300-millimeter, 65-nanometer BCD platform, which, as we have discussed in prior quarters, enables us to enter lower voltage and higher volume markets in handsets and other consumer devices, in addition to our higher voltage industrial and automotive segments. We are pleased to report that we have ramped certain handset products to high volumes in this technology in our Japan factory, and now are qualifying our Albuquerque facility to enable further growth. We anticipate beginning production in Albuquerque in 2025, and given the large capacity available, anticipate this to provide strong growth for our power business for years to come. Moving to sensors and displays, which represent 14% of our corporate revenues in the third quarter, at years begin, we expected second half growth, in particular from customers serving machine vision. This has not happened, but rather the imaging business remains stable through the year at the Q2 run rate. Our customers are optimistic about 2025 growth based upon new wins, particularly based upon wins with our 300 millimeter, 65 nanometer CIS platform. Among these wins is a stacked VSI global shutter, ultra high resolution sensor, 100 and 325 megapixels, showcased by one of our leading customers in last month's vision show in Stuttgart. In the display front, we are engaged with two very large customers in the AR and VR market with OLED and silicon displays, expected to tape out our products next year on our new 5-volt with extensions to 8-volt transistors, lean 300-millimeter platform with state-of-the-art low leakage currents and high density capacitors. Our FAB utilization rates for the third quarter were FAB 1, as previously announced, will be operationally consolidated into FAB 2, and was at about 85% entering into last-time buys. FAB 2 8-inch, as well as FAB 9 8-inch, were about 60% each, with concurrent capacity repurposing and cleanroom build-out to meet the continually growing forecasted demand for silicon germanium and silicon photonics products. Fab 3 8-inch was at 65%, currently at full silicon germanium silicon photonics capacity, with real-time activities reducing certain bottlenecks, targeting a 20% increase in the fab utilization. Fab 5 8-inch was at about 60%. Fab 7 12-inch was about 85%, fully loaded to our operational model. With that, I'll turn the call to our CFO, Mr. Oren Shirazi. Oren, please.