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Wed, Jan. 20, 12:37 PM
- TowerJazz (NASDAQ:TSEM) took part in a management call hosted by Drexel Hamilton, in which they defended their accounting practices as being in strict accordance with U.S. GAAP.
- Management also said external auditors Deloitte and Touche have ensured TowerJazz’s full compliance with account standards.
- The call was largely a response to Spruce Point Capital, who gave a presentation questioning the company’s accounting, causing shares to plunge.
- Drexel Hamilton reiterated a Buy rating on the company with a $28 price target, adding that SiGe wafer demand could rise to the thousands in 2H16, selling at a 1.5x-1.6x price premium.
- The stock, however, has not been spared the carnage of the day, as the Nasdaq Composite slumps 2.4% bringing other semiconductor manufacturers like TowerJazz peers Semiconductor Manufacturing International and Magnachip Semiconductors down with it.
- Previously: TowerJazz to participate in management call series
Thu, Jan. 14, 2:33 PM
- "In our opinion, Tower is a collection of old semi foundries cobbled together from acquisitions, which produce significantly below industry average GAAP gross margins," reads the start of a 79-slide presentation from Spruce Point Capital making a bear case for TowerJazz (NASDAQ:TSEM). "Tower has a speculative business model that does not appear to make money, and appears dependent on issuing its inflated equity to finance transactions with larger industry counterparties ... Valuing Tower at between 0.5x and 0.8x 2016E revenues gets us a valuation range of approximately $3.00 - $6.00 per share (50 -75% downside)."
- In a Seeking Alpha article summarizing his firm's bear case, Spruce Point's Ben Axler notes TowerJazz's shares count has grown 34% since 2005, and that the company spends just ~15% of revenue on capex vs. the ~40% spent by other chip foundries. It argues partnerships with Micron and Panasonic "reflect a short-term business strategy designed to bolster revenue growth for short periods, which allow its partners to sunset aged product cycles," and asserts TowerJazz marks the value of its Panasonic JV at a 250%+ premium to Panasonic's valuation.
- Spruce Point also believes TowerJazz has "engaged in other questionable accounting maneuvers to give the appearance of strong Non-GAAP gross margins, profitability, and free cash flow such as: 1) Shifting COGS expenses to R&D and SG&A; 2) Changing the presentation of capex from “gross” to “net”; 3) Extending the useful life of its assets to reducing depreciation expense; 4) Excluding depreciation and amortization to present Non-GAAP results (not industry standard); 5) Haircutting its convertible and bank debt by inappropriately interpreting the accounting guidance." In addition, the firm questions the academic credentials of CEO Russell Ellwanger.
- TowerJazz has fallen below $11 on volume of 4.5M shares vs. a 3-month daily average of 499K.
Dec. 17, 2015, 2:41 PM
- TowerJazz (TSEM) has struck a 3-year deal with Indian government agency/wafer fab owner Semiconductor Laboratory to process engineering and equipment maintenance services for the agency's facilities.
- The deal is expected to produce revenue of $35M; for reference, TowerJazz's Q4 sales consensus is at $252.7M. The company asserts the agreement allows it to "realize profits and cash generation from its valuable manufacturing expertise and its skilled engineering manpower."
Nov. 18, 2015, 10:37 AM
- TowerJazz (NASDAQ:TSEM) is buying analog/mixed-signal chipmaker Maxim's (MXIM +1.3%) San Antonio, TX wafer fab for $40M in stock. The deal is expected to close in January.
- The fab manufactures chips on 8" (200mm) wafers, supports analog process nodes of 130nm and higher, and will boost TowerJazz's total production capacity to 28K wafers/month.
- As part of the deal, Maxim (already a TowerJazz client) has struck a long-term supply deal with TowerJazz related to the San Antonio facility. TowerJazz plans to "quickly qualify its core specialty technologies, including its advanced Radio-Frequency Silicon-on-Insulator (RF-SOI) offering," for use at the fab.
- TowerJazz's shares have hit $16 for the first time since June. The 52-week high is $18.29.
Nov. 11, 2015, 12:17 PM
- TowerJazz (NASDAQ:TSEM) has rallied above $15 after beating Q3 estimates and guiding for Q4 revenue of $252M (+/- 5%), above a $249.9M consensus at the midpoint and representing 21% Y/Y organic growth (7% overall growth).
- Q3 organic growth (excludes Micron and Panasonic) was 28%, with photomasks and design wins both rising 13%. The specialty foundry declares it has "confidence in a very strong 2016 and beyond." $45M in advance payments have been received for capacity bookings.
- Financials: Gross margin (non-GAAP) rose to 38% from 37% in Q2 and 30% a year ago. R&D spend rose by $0.4M Y/Y to $15.8M; MG&A spend fell by $0.2M to $14.8M. TowerJazz ended Q3 with $155M in cash, and $134M in net debt.
- Q3 results, PR
Nov. 6, 2015, 4:47 PM
- The Philadelphia Semi Index (SOXX +2.6%) rallied after Nvidia (NVDA +13.9%) beat estimates and provided strong guidance (gaming GPUs led the way), Skyworks (SWKS +7.1%) offered good calendar Q4 guidance and RF chip peer Qorvo (QRVO +23.2%) posted better-than-feared results and guidance. The Nasdaq rose just 0.4%.
- Also: Analog/Ethernet chipmaker Microsemi (MSCC +4.9%) beat calendar Q3 revenue estimates and offered solid Q4 guidance: Revenue of $325M-$329M and EPS of $0.70-$0.74 vs. a consensus of $323.5M and $0.72.
- Big gainers today included specialty foundry/Skyworks supplier TowerJazz (TSEM +6%), smart TV/home automation chipmaker Sigma Designs (SIGM +16.6%), telecom/networking IC provider InPhi (IPHI +6.7%), touch controller/LCD driver supplier Synaptics (SYNA +6.1%), FPGA maker Lattice Semi (LSCC +6.6%), network processor vendor Cavium (CAVM +5.6%), DSP core IP provider CEVA (CEVA +7.2%), and analog/mixed-signal chipmakers MagnaChip (MX +4.6%) and Semtech (SMTC +5.4%).
- On its earnings call (transcript), Qorvo mentioned Chinese smartphone demand (a recent headwind) is "seeing a bit of a rebound," and that the launch of 5-mode and 6-mode Chinese 4G phones is boosting RF chip content. Qorvo also thinks Chinese base station activity (an issue for many telecom chip/component firms) bottomed in Q3, but cautions a mobile infrastructure recovery is expected to be gradual.
- Microsemi stated on its call (transcript) broadband gateway chip sales were a Q3 strong point, that telecom infrastructure began to improve, and that defense/aerospace sales are expected to rebound in 2016. Industrial demand remained soft in Q3.
- MKM's Ian Ing has upgraded Nvidia to Buy, calling shares "expensive and worth it." Ing: "We see a sustainable growth trajectory, given [Nvidia's] positioning to lead in significant paradigm changes favoring more valuable semiconductor solutions: automotive evolving from driver assist to autonomous driving, gaming transitioning to virtual reality and professional or social E-sports, and cloud computing increasingly using GPU accelerators for machine learning."
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Last week: Chip stocks sell off after NXP, STMicro, others issue soft guidance
Oct. 20, 2015, 10:24 AM
- Drexel Hamilton has launched coverage on RF chipmaker Qorvo (QRVO +1.6%), tunable RF filter developer Resonant (RESN +2.9%), and specialty foundry TowerJazz (TSEM +4.7%) with Buy ratings. Qorvo rival/TowerJazz client Skyworks has also been started at Buy, but is nonetheless down slightly.
- Qorvo, hammered in July by its soft FQ2 guidance, is down 31% YTD, and trades for just 8.8x an FY17 (ends March '17) EPS consensus of $5.45. Resonant, crushed by Skyworks' decision to terminate a development agreement, is down 66% YTD. TowerJazz is nearly flat on the year.
Oct. 1, 2015, 2:01 PM
- After outperforming yesterday as markets rallied, chip stocks are doing the opposite today amid a selloff. The Philadelphia Semi Index (SOXX -2.1%) is back below $80.
- Possibly hurting the group: Digitimes reports iPhone chip suppliers are worried Apple could cut its Q4 orders, and that one "major analog IC supplier" has disclosed a slight December order cut. At the same time, Digitimes states suppliers won't know if major order cuts will happen for at leas 1-2 months. iPhone suppliers seeing major losses include NXP (NXPI -4.2%), Avago (AVGO -3.8%), Qorvo (QRVO -4.5%), Cirrus Logic (CRUS -3.1%), Fairchild (FCS -4.9%), and Analog Devices (ADI -3.8%).
- However, it's worth noting several chipmakers lacking iPhone exposure are also down strongly. The list includes Himax (HIMX -3.5%), PMC-Sierra (PMCS -4.1%), InPhi (IPHI -4.6%), Semtech (SMTC -4.6%), and QuickLogic (QUIK -5.7%). Chip IP provider CEVA (CEVA -3.8%) and specialty foundry TowerJazz (TSEM -5%) are also selling off.
- Memory giant Micron reports after the bell.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Sep. 8, 2015, 9:32 AM
- TowerJazz (NASDAQ:TSEM) has signed a deal with an unnamed client to receive a $30M advance payment that will be used for fab capacity expansion.
- CEO Russell Ellwanger uses the announcement to state TowerJazz is seeing "a very high demand, exceeding our current manufacturing capabilities, primarily in our analog [18nm] technology processes," and that (among other things) the company continues to expand capacity and explore M&A opportunities.
- Shares jumped last week after TowerJazz unveiled a new SOI-based RF switch manufacturing process.
Sep. 8, 2015, 9:14 AM
Sep. 2, 2015, 9:28 AM
- TowerJazz (NASDAQ:TSEM) and its TPSCo Japanese analog foundry JV (launched with Panasonic) have developed a manufacturing process for 300mm silicon-on-insulator (SOI) RF chip wafers said to "reduce losses in an RF switch by as much as 30% relative to current technology, improving battery life and boosting data rates."
- TowerJazz adds the process enables chips with a Ron-Coff figure of merit (a metric used to measure RF switching signal losses) of below 90fs, a level "considered unthinkable" for an SOI switch process a few years ago, and that TPSCo's support for a 45nm manufacturing process "enables the integration of an increasing number of RF features in a small footprint on a single, RF-friendly, SOI die."
- SVP Marco Racanelli: "We are already in high volume production with our industry leading SOI technologies in our Newport Beach (USA) and Migdal Haemek (Israel) fabs. Opening up the 300mm Uozu fab in Japan now also gives us additional scale and the supply flexibility needed to capitalize on RF component market growth"
- Shares have jumped to $11.77 premarket.
Sep. 2, 2015, 9:17 AM
Aug. 5, 2015, 6:10 PM
- TowerJazz (NASDAQ:TSEM) rallied to $13.93 today after beating Q2 estimates with the help of strong demand from RF front-end module (e.g. Skyworks), image sensor (e.g. Himax), and power management IC clients. Q3 revenue guidance of $244M is below a $247.5M consensus, but a soft forecast was expected after a long list of chipmakers provided light guidance in recent weeks.
- Q2 Y/Y organic growth (excludes Micron and Panasonic) was 35%. Gross margin (non-GAAP) rose to 37% from Q1's 36% and Q2 2014's 27%. The Israeli specialty foundry ended Q2 with $150M in net debt.
- Q2 results, PR
Aug. 5, 2015, 9:19 AM
- Gainers: FNJN +60%. BIOC +13%. FSLR +11%. KATE +9%. Z +9%. HRB +8%. OAS +8%. TSEM +8%. PCLN +7%. SLTD +7%. MSI +6%. ATVI +6%. SUPN +6%. LC +6%. CTSH +6%. BBL +6%. SDRL +5%.
- Losers: SALE -33%. OHGI -28%. LL -24%. BOOT -23%. ETSY -20%. TRMB -13%. GLUU -10%. RSO -10%. DIS -9%. NYMT -7%. MEMP -7%. GNW -7%. PWR -7%. CERN -6%. PZZA -6%.
Jul. 8, 2015, 11:37 AM
- Chip stocks are underperforming as the Nasdaq registers a 1.2% decline. The Philadelphia Semi Index (SOXX -2.6%) is now down 13% from a June 1 peak of $101.80, and 4% YTD; it's still up 87% from a Nov. 2012 low of $47.58.
- Plunging Chinese equity markets could be weighing on the group. With retail Chinese investors having set up brokerage accounts en masse over the last year, there are plenty of concerns about the reverse wealth effect of a crash. The Economist reccently downplayed those worries, noting a relatively modest 15% of Chinese household assets are invested in stocks.
- Major decliners among chip developers include Skyworks (SWKS -4.9%), Qorvo (QRVO -5.6%), InvenSense (INVN -5.6%), NXP (NXPI -4.7%), Freescale (FSL -4%), MoSys (MOSY -9.4%), AppliedMicro (AMCC -5.1%), Cavium (CAVM -3.8%), and Silicon Motion (SIMO -6.4%). SIMO also fell yesterday after favorably adjusting its Q2 sales guidance. Skyworks and Qorvo sold off yesterday morning before rebounding in afternoon trading.
- Other names tied to the industry that are seeing heavy selling pressure include ARM (ARMH -4%), TowerJazz (TSEM -5.1%), UMC (UMC -4.4%), Veeco (VECO -4.3%), and Axcelis (ACLS -4.6%).
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Jun. 22, 2015, 1:24 PM
- TowerJazz (NASDAQ:TSEM) states automotive driver-assistance system supplier BrightWay Vision has hired it to manufacture CMOS (silicon) image sensors going into BrightWay's automotive cameras.
- TowerJazz adds the companies have "developed a unique gated pixel" said to have never been produced before on silicon due to its fast-charge transfer requirements, and that the solution both offers better performance and is cheaper than infrared vision alternatives.
- On its Q1 CC (transcript), TowerJazz stated its image sensor foundry business remains strong, and has been able to expand into new markets thanks to the Panasonic JV (TPSco). Taiwan's Himax (NASDAQ:HIMX) is a client.
Tower Semiconductor Ltd is a pure-play independent specialty foundry dedicated to the manufacture of semiconductors. It manufactures ICs on silicon wafers, using the customer's proprietary circuit designs.
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