"We had a good quarter. Some lowered their guidance because of the trade war between the US and China, but we didn't. We outperformed the forecasts in all of the parameters. I think that's a powerful message," Tower Semiconductor CEO Russell Ellwanger said today following the publication of the company's results, adding that the headwinds against Tower Semiconductor were more geopolitical than economic. "Another powerful message is the $100 million investment because of orders from customers that outstripped our existing production capacity. This will generate additional growth for us in areas where demand is strong," Ellwanger explained.
Tower Semiconductor explained that because of the significant increase in utilization of production capacity in the company's advanced fab (on a 300-milimeter platform) and greater demand from customers beyond the its current production capacity, the company would add production capacity in its 300-milimeter fab in Uozu, Japan. According to the plan, the equipment is scheduled to be installed in the first half of 2020.
"Globes": Is expanding production capacity a long-term solution, or will further investment be necessary later?
Ellwanger: "We're glad that it's not a long-term solution, because demand is very high. It's a solution for activities that we need in 2020, and will facilitate additional activities beyond 300 millimeters, which will add to revenue and profit margins. This is a short-term action that will provide a solution in the medium term. If the situation continues the way we believe that it will, we'll need more production capacity in the future."
How will you get that?
"There are many possible ways, for example the deal we made in the past with Panasonic in the attempt to buy the fab and so on. You can assume that we're considering all of the ways."
In existing activity, Ellwanger cites the power management sphere as a market that was strong in the second quarter and will continue to be strong in the next quarter. In a similar context, he also mentions aviation and defense activity. Ellwanger says that for the year as a whole, all of Tower Semiconductor's spheres of activity will show a good balance for growth in comparison with 2018, except for the SiGe market, which is mostly for data centers and will show a decline, especially in comparison with the rate of revenue in late 2018.
Tower Semiconductor previously said that the second half of 2019 would be better than the first half, and Ellwanger said today, "The third quarter will definitely be better than the first and second quarters, and this is good. There is still uncertainty about the fourth quarter, and I can't commit to a number right now, but we believe that our actions will assist organic growth."
Published by Globes, Israel business news - en.globes.co.il - on July 29, 2019
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