The rollercoaster that Tower Semiconductor (TASE: TSEM; Nasdaq: TSEM) has been on in the past few years is extraordinary. From the promise of one of the biggest exits in Israel’s history, to dramatic cancellation of the deal and a prolonged slide in the share price, to a surge that has gathered strength in the past year. Tower Semiconductor has emerged from these ups and downs, which took place against a background of global upsets such as the rise in interest rates, a bear market, US tariffs, and three wars in Israel, on top.
In the summer of 2023, eighteen months after Tower signed an agreement for its sale to chip giant Intel, the agreement expired without all the necessary regulatory approvals having been received, and the deal was cancelled. Shortly afterwards, Tower’s share price fell to a low of less than half the acquisition price in the cancelled deal, giving it a market cap of $5.4 billion. Last summer, two years on, the share price, which had partially recovered, suddenly started to climb steeply. Since last August it has risen by nearly 329%, adding $17 billion to the company’s market cap. Its current level, $22 billion (NIS 69.7 billion in Tel Aviv), which is more than four times the valuation in the cancelled deal with Intel, makes the analog chip manufacturer from Migdal Ha’emek the fifth largest company in Israel in market cap terms, and the third largest Israeli company on Wall Street. Anyone who invested it at its most recent low (October 2023) has made nine times their investment.
Talking to "Globes", Tower CEO Russell Ellwanger looks back on the lows and the highs, and explains why the share price has shot up recently and the significance of the company's deal with Nvidia.
The sharp rise in Tower Semiconductor’s share price in the past few weeks is attributed to several important announcements by the company. One of them indicated that it had solved the problem of a significant constraint in infrastructure for AI, namely the fact that the growth in power consumption for AI infrastructure turns inefficient power delivery into a bottleneck. Tower’s technology improves the efficiency of power delivery for AI chips and servers, and it is cheaper than existing solutions.
Another important announcement was about the development of new technology for high-speed optic switching for AI infrastructure and networks, while yet another was about a breakthrough demonstration of optic communications technology developed in collaboration with Coherent Corp. (NYSE: COHR) on the basis of Tower’s silicon photonics platform, that will expand the capabilities of data centers. The technology uses light to transmit data within a chip, giving better, faster performance, suitable for the high volumes of data handled by data centers supporting AI.
Nvidia recently announced investment in two companies in this field, one of them being Coherent. "At this point, photonics is really amazing. In the past, about three optic chips were needed for each GPU processor supporting AI, and now its six or eight because of the complexity, so demand is burgeoning," Ellwanger says.
"Our sales in this area rose from $28 million in 2023 to $238 million in 2025, with an annual rate of sales of $380 million in the fourth quarter. We are now increasing our production capacity in this field fivefold."
This in fact is the subject of another announcement by Tower within the past few days: expansion of the production at its 300mm facility (Fab 7) in Japan, while Tower has an agreement with Nvidia, announced in February, under which it supplies silicon photonics components for 1.6 terabit data center optical modules designed for Nvidia networking protocols.
How did the deal with Nvidia come about? Did you know their CEO, Jensen Huang?
"I don’t feel comfortable enough to give details of how it came about, but I’ve never met Huang. We have very strong ties with Nvidia and longstanding relations with them, and there are joint projects carried out directly with Nvidia, not through third parties such as customers. We are one of their main suppliers in silicon-based optic connectivity.
"In the end, every good company doesn’t just know its own immediate supply chain, but also that of its suppliers, especially when they are dependent on chip foundries."
Tower’s offices in Midgal Ha’emek are only twenty kilometers away from Nvidia’s offices in Yokne’am. Were you in touch before the deal?
"There’s no real connection between the deal and the geographical proximity. That is to say, much of Nvidia’s supply chain in this field takes place through this group (formerly Mellanox) but there was no Israeli connection that led to the deal coming about. The fact that we are leaders as direct suppliers in silicon photonics is what was decisive."
In language as simple as possible, what lies behind the optic chip you are supplying to Nvidia, and what is its importance for data centers and AI processing?
"Optic connectivity transfers data at very high speed and saves costs. It has superior performance and a lower price, and when you have better cost and efficiency, that’s good for everyone."
"Investors punished us unjustly"
Tower Semiconductor’s share price has soared recently. Is this because investors now understand something about the company that they didn’t understand before?
"It’s not that they didn’t understand us before, but today, when we are leaders in analog chips, investors understand the Tower story well. There are many reports about TSMC and what they are doing with advanced digital technology, but I think that perhaps in the past people did not understand well that there are analog chips in every device sold, without which it would not be able to function."
Further on the pricing of Tower’s stock Ellwanger adds: "I thought that it was not justified that after the Intel deal was cancelled we were severely punished by the market. We were traded at a market cap of $4.6-4.7 billion, and we went down to $2.3 billion, and that was something I didn’t understand. But the beauty of the deal was the way we structured it, and that’s one of the reasons that we’re so successful today. We were very clear in the agreement that Intel would have no influence on how we would spend money on activities (before completion of the deal), and in fact we spent a great deal of energy at the time on the silicon photonics business.
"Even then we were at a market share of more than 60% in optic transceivers, but we had a strong belief that silicon photonics would reach the market very fast, and we continued to invest time and resources. It has become very strong since then, and today we supply to eight of the ten biggest manufacturers in the world.
"In the end, it all comes down to vision and hiring people. As a private individual too, you always need to have a vision of where you want to reach, and then to formulate the action required with the people around you. We decided very early on that we wanted to be a leading company in analog chips. We knew that we couldn’t compete as a second or third supplier of digital chips, and the people and manpower that we brought in were excellent"
Ellwanger has praise for the managers who work under him, but he adds that the chairperson to whom he reports is no less important - Amir Elstein, who has been in the post since 2009. "He is a wise and supportive partner. When you have a board that works with you and even gives you the benefit of the doubt, that understands that mistakes might happen, but things weren’t done with bad intentions, and you admit these mistakes, you can really do great things."
Is Tower’s current market cap justified? With the new deal with Nvidia and the entry into the AI sector, the p/e ratio has adjusted itself to the industry, and is very high in comparison with other chip companies.
"It’s possible to agree with that argument, and I think that it’s a good thing. We’re a key player in the field and, as we announced, we are supplying to Nvidia the optic connectivity module that can transfer data at volumes of 1.6 terabits, which means that we are critical to the AI ecosystem.
"We have a substantial market share in optic connectivity, so it could be that the connection with artificial intelligence gives us a high value in relation to other companies, but in my view the financial model justifies that, considering the fact that our projected net profit for 2028 is $750 million.
"We intend to expand our production capacity for 300 mm chips at least fourfold, which provides a growth track beyond 2028, and accordingly raises the p/e ratio to a level characteristic of a growth company. You can say that the p/e ratio (for the previous twelve months) is over 80, but in accordance with the financial model for 2028 it’s about 35. Is that a realistic multiple? I’m not sure that it’s overdone for a company with very high growth, and with our expansion in 300 mm we’re on a growth path in which our fate is in our hands."
From $550 million debt to an industry powerhouse
When Ellwanger was appointed CEO of Tower Semiconductor in 2005, few people believed that the company would even survive, let alone succeed and prosper. At that time, Tower (then controlled by Idan Ofer’s Israel Corporation) was burning cash, and had debt of over $500 million to the banks. Ellwanger promised that within ten years Tower would reach $1 billion annual revenue and would be profitable, a prediction that seemed very far from the dismal reality, but that was realized on schedule. As CEO, Ellwanger led Tower to debt arrangements with the banks, to paying off the remaining debt, and at the same to expansion, organically and through acquisitions.
Did you think at that time that Tower would become one of the biggest companies on the Tel Aviv Stock Exchange?
"I didn’t think it would happen, but I didn’t think it wouldn’t happen either - it simply wasn’t the main thing that concerned me. It wasn’t that I didn’t believe that it could be one of the five biggest companies in Tel Aviv, but Tower was then a company with a large loss and negative operating cash flow, so first of all we had to deal with those issues. It took the company ten years to reach $1 billion revenue and a profit, as I declared when I arrived, and it needed a very aggressive plan to get there - the company was in a really bad situation."
One of the fairly early moves that Ellwanger led at Tower was the acquisition of US company Jazz in a share-based deal in 2008. ""People asked, ‘How does a loss-making company buy another loss-making company’" Ellwanger recalls. "But that was a very smart move that we made; it strengthened us in RF and SiGe chip technologies."
Another significant step came in 2013, when Tower formed a joint venture for manufacturing chips with Panasonic in Japan, TPSCo, in which Tower held 51%. In 2019, Panasonic sold its share to Nuvoton, and this week Tower announced a restructuring of TPSCo whereby it will receive full ownership of the 300 mm facility (Fab 7) and Nuvoton will receive the 200 mm facility and pay Tower $25 million. At the same time, Tower announced the expansion of Fab 7. Subject to receipt of a grant from the Japanese Ministry of Finance, it will buy land adjacent to the facility and expand its capacity fourfold.
"In previous years we made acquisitions and we really didn’t have money. Now the company is in a very different situation," Ellwanger says. "We have $1.2 billion cash, which enables us to make significant capital investments. We have invested nearly $1 billion in expansion in the past few years, with a very, very rapid return on investment, and we’re in a pretty amazing position, when we’re about to expand our 300 mm production capacity."
The main challenge for Tower, according to Ellwanger, is to maintain its leading market share, to make sure that its technological roadmap is in advance of its competitors, so that customers won’t want to leave. "It’s a challenge, but also an opportunity," he says. The next challenge is building further production capacity.
What about geopolitical challenges such as the rise in energy prices and the war in Israel?
"The rise in energy prices is not something that materially affects us. As for the war in Israel: I have been a guest of Israel for twenty years now, and I don’t want to respond on that." Nevertheless, it’s important for Ellwanger to add: "There are some amazing things about Israeli culture. It’s true that it’s an aggressive society, but when it comes to it, there are none better than the Israelis, and when employees are on reserve duty, the others see it as a point of honor to do more, and that way we haven’t missed a single consignment during the war. When times are tough, the Israelis pull together."
$71 million compensation in a decade
The improvement in Tower Semiconductor’s situation has also been good for its CEO’s bank account. In the past eleven years (since the company has been obliged to report senior executives’ compensation), Ellwanger has accumulated compensation of $71 million, of which $43.4 million is stock-based.
In an interview two years ago, you declared that you had no intention of retiring. Has there been any change since then?
"I have no immediate intention of retiring. If I were to retire, I wouldn’t leave the company, but I would give someone else the opportunity of being CEO. I would stay at Tower. This is my life, and something in which I’ve invested so much time and energy that it’s very hard to leave. And frankly, I’m also enjoying where we are and what we’re doing. I come home happy every day. For me, work is happiness. There’s nothing more enjoyable than interaction with intelligent people like our workers and our customers."
Published by Globes, Israel business news - en.globes.co.il - on April 5, 2026.
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