Tower Semiconductor Ltd.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Tower Semiconductor Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. There will be a presentation followed by the question and answer session, at which time, if you wish to ask a question, you will need to press star 11 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. I would now like to hand the conference over to our speaker today, Ms. Noet Levy, Senior Vice President of Investor Relations and Human Resources. Please go ahead, Madam.

Thank you. Good day, and thank you, everyone, for joining us. Welcome to Tower Semiconductor's Third Quarter 2025 Financial Results Conference Call. With us today are Mr. Russell Elwanger, our CEO, Dr. Marco Racanelli, our President, and Mr. Oren Shirazi, our CFO. Before we begin, please note that certain statements made during this call may be forward-looking and are subject to risks and uncertainties that could cause actual results to differ materially. These risks are detailed in our SEC filings, Form 20F and 6K, as well as filings with the Israeli Securities Authority, all available on our website. Tower assumes no obligation to update forward-looking statements. Our third quarter 2025 results are preserved in accordance with U.S. GAAP. Some data presented may include non-GAAP financial measures as defined under SEC Regulation G. Reconciliations to GAAP figures and full explanations are provided in today's press release and financial tables. For your reference, a supporting slide deck is available on our website and integrated into this webcast. With that, I'd like to turn the call over to our CEO, Mr. Russell Irwinger. Russell?

Hello, everyone. Thank you for joining this earnings call. We are in the best position growing our core technologies, power management, CMOS image sensors, 65 nanometer RF mobile, each of which demonstrating year over year revenue growth, providing an excellent foundation on top of which the extreme AI driven data center demand for our silicon photonics and silicon germanium RF platforms is driving unprecedented company growth. We ended our third quarter with revenue at $396 million, resulting in net profit of $54 million. We guide our fourth quarter to be a revenue record of $440 million plus minus 5%, fulfilling our beginning of year target of quarter over quarter growth throughout the year with strong acceleration in the second half. This underscores the increasing demand momentum we see in our served markets and is as well the result of further manufacturing capabilities, namely the very first step of a large ramp having repurposed with added capacity for factories towards new and or stronger silicon photonics and silicon germanium capabilities. The fourth quarter guidance indeed demonstrates the burgeoning trajectory we are on. In the following minutes, we will present the successes that we share with our customers, driving top and bottom line growth over the years to come. Now to review our third quarter of 2025 revenue breakdown and discuss the key trends, please see slide four as reference. Our RF infrastructure business continues to deliver exceptional growth, increasing its contribution to corporate revenue from 67 million or 18% of corporate revenue in the third quarter of last year to $107 million or 27% for the third quarter of this year. For the full year, we expect this business to grow by 75% with silicon photonics more than doubling from the 2024 $105 million. This significant expansion reflects the strong customer adoption of our advanced technology and validates our strategic investments in these markets. The momentum we are seeing positions RF infrastructure, silicon photonics, and silicon germanium platforms as a key pillar for our long-term growth, fortified and propelled by deep partnerships-based innovations with the foremost industry titans. Our silicon photonics business grew in the third quarter to $52 million, Approximately 70% growth as compared to the third quarter of 2024. Market demand for silicon photonics continues to surge, driven by a stronger than anticipated ramp in 1.6T products on top of a robust 400G and 800G demand. We have expanded capacity with our advanced SIFO platforms in Fab 9 San Antonio, having shipped revenue wafers in the third quarter and expecting multiple thousands to be shipped in the fourth quarter of this year. We are in advanced stages of qualifications in Fab 2 Israel, expecting our first production shipments in the first quarter of 2026. In 300 millimeter, we have started wafer production for the innovative receipt products we announced last quarter and anticipate revenue contribution from 300 millimeter silicon photonics to start in the fourth quarter of this year. Our capacity growth is fully aligned with and spoken to by our customer demand outlook. Silicon Photonics continues to increase market share over EML solutions, given its significant cost advantage. SIFO typically requires half the number of lasers as an equivalent EML product, with performance benefits especially seen at 1.6T. As such, we anticipate this market share shift to be permanent. We are, at this point, going to add additional CapEx to address an even increased surging demand. Looking at next generation 3.2T data rates, which will require a doubling of speed for each lane from the current 200 gigabit per second to 400 gigabit per second, we have multiple programs with industry leaders to both extend silicon capability, but we are also pursuing integrating indium phosphide modulators for our previous announcements with OpenLight, and as well, are investigating other material systems to ensure that our customer partnerships are not just ready, but leading the transition to next-generation requirements for 3.2T and 6.4T. In the past quarter, in partnership with Escape Photonics, an NVIDIA-backed startup, we delivered the industry's first optically pumped, on-chip, multi-wavelength laser platform for AI data center fabrics. This innovation further expands our participation in the laser market, particularly for co-packaged optics applications, a significant adjacent opportunity, leveraging our high-volume SIFO platforms. We showcase these advancements, along with others, at a highly successful tower technical symposium event in China with approximately 300 attendees, where eOptiLink delivered the keynote addressing Tower's role in supporting phenomenal market growth. Later this month, we anticipate another great TGS event in Santa Clara with Broadcom's president, Charlie Kawas, delivering the invited customer keynote. Looking at silicon germanium, silicon germanium transimpedance amplifiers and laser drivers are essential components for optical transceivers. The growth in PsyG demand is a function of data center build-outs, be it SIFO or EML-based solutions, with an additional accelerator, the adoption of linear pluggable optics. Due to the elimination of the DSP in the LPO module, LPO requires both the driver for transmit and the TIA for receive to have an added function of continuous time linear equalizer, which significantly adds to the silicon area of each of the TIA and drivers. Hence, nicely increasing the amount of silicon needed per unit. Multiple CyG customers have begun material LPO production volumes, indicating a clear upward trend in this market. We started silicon germanium production Fab 2 of our most advanced CyG platforms and are seeing eager adoption by LEAP customers driving meaningful additional contributions to PsyG capacity and shipments projected to ramp throughout 2026 and delivering high volumes thereafter. In addition to infrastructure, we have secured a new silicon germanium low noise amplifier designed for a Tier 1 handset customer with an initial ramp in Q4-25 and then proceeding through 2026 and beyond, adding a significant new growth opportunity to our existing leading market share in optical transceivers as discussed, itself being a high growth market. Moving to RF Mobile, it represented about 26% of our Q3 2025 corporate revenue. RF SOI has shown steady quarter over quarter demand increases with our more advanced 65 nanometer, 300 millimeter platforms at higher than 20% increase second half 2025 over second half 2024. We released this quarter an updated RFSOI technology that not only provides double-digit better R-on-C-off relative to our competitors, as measured by multiple Tier 1 customers, but also reduces layer count by 15%, improving our customers and our margins, hence enhancing our market share. This technology also allows customers the freedom to make a trade-off between the better R-on-C-off to enable a smaller die size or to have higher power handling. And as such, we are seeing strong customer traction, providing much confidence in multi-year growth. This quarter, we made important advancement in our sensor and displays technologies, which represented 14% of our third quarter corporate revenue and expected to show mid-teens full year over year growth. We received our first production PO for Q126 shipments for OLED display backplane silicon, and continue to enhance this offering, having added high-speed logic and high-speed SRAM capabilities, enabling support for 120 Hz refresh rates, critical for next generations of VR and MR applications. Medical and photography sensor revenue remains stable, while the majority of our growth and strongest position is in machine vision, where we supply the second largest player in this market, in addition to other key customers. Power management represented 17% of our third quarter corporate revenue. Our power business has performed well, targeting a year-over-year growth of 15%, with disproportionately higher growth for advanced 300 millimeter platforms, one driver of which being the strong ramp of the handset envelope tracker, ETIC volume, expected to continue through the next multi-years. Targeting the growing market of data center power, we have recently demonstrated 16-volt operating voltage devices with more than 40% lower RDS on than prior technology, and as well introduced new elements to our 1.2 3.3 volt 65 nanometer BCD flow. improving power conversion efficiency aligned to our key customer needs. The wireless charger IC market is growing rapidly and demanding higher voltage LDMOS. To that end, working closely with lead customers, we have provided a 40-volt extension to our 300-millimeter BCD process. Specific to automotive and battery management applications, we have multiple engagements for a differentiated 140-volt resurf flow allowing higher voltages without the need for the added high expense of SOI substrates. We've continued to add to the competitiveness of this platform, greatly reducing the cell size through added features and optimized architecture. Moving to utilization, at year's begin, we announced a repurposing of several of our factories, predominantly towards higher capacities for RF infrastructure, namely silicon germanium and silicon photonics. To upgrade, to update on the progress, qualification and initial ramps are going well, with hundreds of silicon germanium wafers shipped in Q2 and thousands in Q3 from FAB9 in San Antonio. We met our first internal milestone of customer SISO shipments in Q3 from San Antonio, with several thousands planned to ship in Q4. FAB2, Migdal Hemic Israel, is on track to ship our first and meaningful number of silicon-germanium wafers in Q4-25 and silicon-photonic wafers in Q1-26. Additionally, we expect to see our first production revenue for SIFO at 300 mm in FAB 7 in this present quarter, Q4. Therefore, while we are in the final qualifications and initial ramp of the repurposed FABs and added capacity, our third quarter utilization levels Fab 2 in Israel operated about 65% utilization. Fab 3 maintained our model full utilization of 85% with growing activities for SIFO capacity. Fab 5 was at 75% utilization. Fab 7, 300 millimeter, was fully utilized, well above our 85% utilization model. Fab 9 was at 60% utilization. In summary, what a position to be in with all our core technologies demonstrating year-over-year revenue growth, the right technologies rolling with the right customers. On top of this, a long-term silicon-germanium leadership for optical transceivers, coupled with correct market insights, mainly believing in the benefits of silicon photonics, having begun eight years ago with the right partner, and adding those who have become the most momentous adopters of this technology, has enabled us by far to be in the lead position for silicon photonics manufacturing and development. This has proven timely to meet the soaring demands of data center technology roadmap and build out. A present and future pathway for unprecedented growth for Tower. In close collaboration with our customers, we have advanced both capacity increases and technology roadmap deliverables real time addressing the rocketing requirements for AI infrastructure. Specific to demand-driven capacity expansion, we target 2025 silicon photonics revenue to be above $220 million, up from $105 million in 2024, and very importantly, at a Q4-25 annualized revenue run rate exceeding $320 million. The $320 million SIFO run rate is enabled by the very first steps in qualification and ramp of the previously announced $350 million investment. We have begun an additional investment of $300 million for further substantial SIFO capacity expansion and next generation capabilities in FAB 3, FAB 9, FAB 2, and FAB 7. This investment targeted to achieve full volume in wafer starts in the second half of 2026. The total capacity is fully aligned to and directly requested by our customers. The resulting capacity should increase our SIFO shipment by over 3x against our targeted fourth quarter 25 qualified utilized capacity. With that, I'd like to turn the call to our CFO, Mr. Oren Shirazi. Oren, please.