Tower Semiconductor Ltd.

Good day and thank you for standing by. Welcome to the Tower Semiconductor First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Noet Levy, Senior Vice President of Investor Relations and Human Resources. Please go ahead.

Thank you, and welcome to Tower Financial Results Conference Call for the first quarter of 2025. 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 filing with the Israeli Security Authority. They are also available on our website. Tower assumes no obligation to update any such forward-looking statements. Please note that the first quarter of 2025 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 a reconciliation of these non-GAAP measures to the GAAP financial measures. We have a supporting slide deck that complements the conference call. This presentation is accessible on our company's website and is 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.

Hello, everyone. Thank you for joining our call today. It is a pleasure to have the opportunity to update on our activities and progress. We opened 2025 with a quarterly revenue of $358 million with a net profit of $40 million. We guide the second quarter of 2025 to a midpoint of 372 million plus or minus 5% and affirm our target for year over year growth with sequential revenue increases throughout 2025 and with strong acceleration in the second half as our multi-fab capacity investments complete customer qualifications and ramp into production. The overall market experienced uncertainty due to tariffs and related policy shifts. However, Tower offers a clear advantage to our customers through our global footprint and proactive cross-qualification of all major process flows across our sites. Our global manufacturing flexibility combined with the strength of our wide technical offerings, give us an immediate opportunity to grow wherever demand emerges or constraints occur. We will now present first quarter 2025 revenue breakdown whilst adding some flavor for the year. Please reference slide number four. In looking at our first quarter revenue breakdown, we see two significant year-over-year shifts. Firstly, RF infrastructure has grown from 14% of our total revenue in Q125 to 22%, and this at a higher corporate revenue level. Secondly, power grew from 10% to 18% of our corporate revenue, a very important shift, resulting from a share gain in a new serve market, which we will refer to shortly. In our RF infrastructure business, we continue to see growth driven by data center and AI expansions served by our silicon photonics and silicon germanium technologies for optical fiber communications. The first quarter of 2025 continued record revenue levels for these two technologies. As we look toward the second quarter, we see further strong sequential increases with continued growth forecasted in the third and again in the fourth quarter of the year. Silicon photonics continues to displace traditional EML solutions at 800 gigabit per second and is anticipated to increase further at 1.6 terabit per second, for which we are presently in a production rank. The market shift to silicon photonics, combined with the expected 800G and 1.6T optical transceiver five-year CAGR of 49% based on light counting reports, provides ample opportunity for tower revenue and blended margin growth in the years to come. Please reference slide number five. In addition to being a driver within these strong market dynamics, we continue to invest in next generations of technology to maintain our very high market share in silicon photonics. For example, this past quarter, we announced a new technology that enabled Imalight to reduce the number of external lasers used per 800G module by a factor of two, and hence substantially reducing the transceiver cost. We also announced with open light the achievement of a 400 gigabit per lane modulator performance, enabling next generations of 3.2T products. To our knowledge, this is the first demonstration of a 400 gigabit per second modulator integrated on an eight inch silicon wafer. Please reference slide number six. Along with silicon photonics, silicon germanium is growing strongly with continued adoption for TIAs and drivers and optical modules, which are benefiting from the same strong market dynamics. Longer term, we see adoption of silicon germanium in satellite terrestrial receivers, as well as in low-noise amplifiers for the most advanced handsets, providing additional growth factors for this high-margin segment of our business. In 2024, the handset market demonstrated about 7% growth, with Tower's RFSOI year-over-year growth being at about 30%. This year, the handset market is currently forecast to see flat to minimal growth, creating a situation where RFSOI customers are now burning off some inventories. However, our handset markets are overall growth, being more than compensated by a new served market for Tower, namely envelope cracker served by our highly differentiated custom developed power management 300 millimeter BCD platform. We expect this to continue to grow and provide a strong revenue stream for multiple years. Finally, in power management, we are seeing a strong rebound in both our high voltage 200 millimeter platforms as well as continued strong growth in our 300 millimeter BCD platforms. Our higher voltage 200 millimeter power business serving automotive, industrial, and consumer applications are in the midst of a strong ramp. In 300 millimeter BCD, we are primarily benefiting from the strong ramp of new business serving the handset market, namely envelope tracker, as previously mentioned. An envelope tracker is used in advanced handsets to improve battery life by interacting closely with the baseband to dynamically adjust the operating point of the power amplifier minimizing wasted energy. Our current ramp is in support of a major new handset with a newly introduced custom baseband that is coupled with our direct customer's envelope tracker. The 300 millimeter business is expected to grow strongly as we continue to qualify additional products and ramp the large capacity we have available in the Albuquerque facility. We are seeing a market rebound in our machine vision sensor business both in 200 millimeter and 300 millimeter. Customers have consumed their inventories and are placing orders, not just for existing SKUs, but also for new sockets demonstrating refreshed vibrance in this market. This includes not only the traditional machine vision market using our global shutter pixel technology, but also 3D depth centers, direct time of flight, based on our SPAD pixel technology for robotics, and autofocus applications. The impact of this rebound is expected to be seen in the revenue of the second half of this year. Utilization. In the first quarter, Fab 2, we continued to build the additional PsyG capacity, operated at approximately 55% utilization. Fab 3 was at 80% utilization. Fab 5 at 65%, growing with the increased high voltage power management demand. and FAB 7 300 millimeter was fully utilized with the highest process layers to date with additional activities allowing us to be well above our 85% utilization model. FAB 9 was at 70% utilization. To note, as previously stated, FAB 2 and FAB 9 are in the midst of repurposing towards silicon germanium and silicon photonics with a valuable capacity awaiting full customer qualification. In summary, we are pleased with progress across all areas. We reaffirm quarter-over-quarter revenue growth for the year. Silicon Potomac and CyG demand remain strong, in fact, very strong, with Tier 1 customer alignment on next-generation co-developments in 200 and 300-millimeter. Our 200-millimeter high-voltage power is experiencing high demand with continued strong interest in 300-millimeter 65-nanometer and finer-line BCD programs. The industrial image market is rebounding on top of a stable medical and camera imaging business, and we remain confident in the realization of high-volume display activities. With that, I'd like to turn the call to our CFO, Mr. Oren Shirazi. Oren, please.