TSEM Tower Semiconductor Ltd

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C  20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-24790

TOWER SEMICONDUCTOR LTD.

(Translation of registrant's name into English)

Ramat Gavriel Industrial Park

P.O. Box 619, Migdal Haemek, Israel 2310502

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒         Form 40-F ☐

On November 13, 2023, the Registrant issued a press release announcing its financial results for the nine months and the three months ended September 30, 2023. The press release is attached hereto as Exhibit 99.1.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 13, 2023

TOWER SEMICONDUCTOR LTD. By:  /s/ Nati Somekh         Name:  Nati Somekh         Title:    Corporate Secretary

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Exhibit 99.1

 

Tower Semiconductor Reports 2023 Third Quarter Financial Results

Highlights

 

 

Ellwanger further commented: “During this challenging time in Israel we have not missed a single customer commit, with strong activities in place to continue seamless operations. Thank you to all our employees worldwide.”

 

Third Quarter of 2023 Results Overview

 

As announced Tower and Intel have mutually agreed to terminate the merger agreement entered in February 2022. The merger termination fee was paid by Intel to Tower during the third quarter of 2023 and is presented in a separate line in the statement of operations for the third quarter of 2023, net of associated cost, in the amount of $314 million. The impact of this fee on net profit for the third quarter of 2023 is $290 million, net of taxes.

 

Business Outlook

Tower Semiconductor guides revenue for the fourth quarter of 2023 to be $350 million, with an upward or downward range of 5%.

Teleconference and Webcast

Tower Semiconductor will host an investor conference call today, Monday, November 13, 2023, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the company’s financial results for the third quarter of 2023 and its outlook.

 

This call will be webcast and can be accessed via Tower Semiconductor’s website at www.towersemi.com or by calling 1-888-642-5032 (U.S. Toll-Free), 03-918-0610 (Israel), +972-3-918-0610 (International).  For those who are not available to listen to the live broadcast, the call will be archived on Tower Semiconductor’s website for 90 days.

About Tower Semiconductor

 

Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the leading foundry of high value analog semiconductor solutions, provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating positive and sustainable impact on the world through long term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor owns two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm), two facilities in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo and is sharing a 300mm manufacturing facility being established in Italy by STMicroelectronics. For more information, please visit: www.towersemi.com

Noit Levy | Investor Relations | +972 74 737 7556 | noitle@towersemi.com

This press release, including other projections with respect to our business and activities, includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) demand in our customers’ end markets, (ii) over demand for our foundry services and/or products that exceeds our capacity, (iii) maintaining existing customers and attracting additional customers, (iv) high utilization and its effect on cycle time, yield and on schedule delivery which may cause customers to transfer their product(s) to other fabs, (v) operating results fluctuate from quarter to quarter making it difficult to predict future performance, (vi) impact of our debt and other liabilities on our financial position and operations, (vii) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (viii) fluctuations in cash flow, (ix) our ability to satisfy the covenants stipulated in our agreements with our lender banks, (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities,(xii) meeting the conditions set in the approval certificates received from the Israeli Investment Center under which we received a significant amount of grants in past years, (xiii) receipt of orders that are lower than the customer purchase commitments, (xiv) failure to receive orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we manufacture products before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) the execution of debt re-financing and/or other fundraising activities to enable the service of our debt and/or other liabilities and/or for strategic opportunities, including to fund Agrate fab’s significant 300mm capacity investments and investments and purchases of equipment and other fixed assets associated with the capacity corridor transaction with Intel as announced in September 2023, in addition to other previously announced capacity expansion plans, and the possible unavailability of such financing and/ or the availability of such financing on unfavorable terms, (xxi) operating our facilities at high utilization rates which is critical in order to cover a portion or all of the high level of fixed costs associated with operating a foundry in order to enable us to maintain our profitability , (xxii) the purchase of equipment to increase capacity, the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) the concentration of our business in the semiconductor industry, (xxiv) product returns, (xxv) our ability to maintain and develop our technology processes and services to keep pace with new technology, evolving standards, changing customer and end-user requirements, new product introductions and short product life cycles, (xxvi) competing effectively, (xxvii) use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers, (xxviii) achieving acceptable device yields, product performance and delivery times, (xxix) our dependence on intellectual property rights of others, our ability to operate our business without infringing others’ intellectual property rights and our ability to enforce our intellectual property against infringement, (xxx) our fab3 landlord’s construction project adjacent to our fabrication facility, including possible temporary reductions or interruptions in the supply of utilities and/ or fab manufacturing, as well as claims that our noise abatement efforts are not adequate under the terms of the amended lease that caused him to request a judicial declaration that there was a material non-curable breach of the lease and that he would be entitled to terminate the lease (we do not agree and are disputing these claims), (xxxi) retention of key employees and recruitment and retention of skilled qualified personnel, (xxxii) exposure to inflation, currency rates (mainly the Israeli Shekel and Japanese Yen) and interest rate fluctuations and risks associated with doing business locally and internationally, as well fluctuations in the market price of our traded securities, (xxxiii) issuance of ordinary shares as a result of conversion and/or exercise of any of our convertible securities, as well as any sale of shares by any of our shareholders, or any market expectation thereof, which may depress the market price of our ordinary shares and may impair our ability to raise future capital, (xxxiv) meeting regulatory requirements worldwide, including environmental and governmental regulations, (xxxv) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, including risks and uncertainties associated with Agrate fab establishment and the capacity corridor transaction with Intel as announced in September 2023, such as their qualification schedule, technology, equipment and process qualification and production facility ramp-up, customer engagements, cost structure and investment amounts and other terms, which may require additional funding to cover their significant capacity investment needs and other payments, the availability of which funding cannot be assured on favorable terms, if at all, (xxxvi) potential impact, in addition to the aforementioned restructuring costs and future additional such costs, incurred by TPSCo and the Company due to the purchase in 2020 of 49% of TPSCo by NTCJ (previously named PSCS) from Panasonic and due to the cessation of operations of Arai manufacturing factory in Japan, which  manufactured products solely for NTCJ through June 2022 and did not serve Tower’s or TPSCo’s foundry customers, (xxxvii) industry and market impact due to pandemics and potential impact on our business, operational continuity, supply chain, revenue and profitability, (xxxviii) potential security, cyber and privacy breaches, and (xxxix), business interruption due to fire, earthquake and other natural disasters, the security situation in Israel, global trade “war”, pandemics, the current war in Israel, including potential inability to continue uninterrupted operations of the Israeli fabs, impact on global supply chain to and from the Israeli fabs, power interruptions, chemicals or other leaks or damages as a result of the war, absence of workforce due to military service and other events beyond our control.

A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in Tower’s most recent filings on Forms 20-F and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.

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(Financial tables follow)

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

		September 30,				June 30,				December 31,
		2023				2023				2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	314,816			$	318,195			$	340,759
Short-term deposits			735,382				419,528				495,359
Marketable securities			179,381				175,872				169,694
Trade accounts receivable			150,162				163,293				152,935
Inventories			304,245				330,819				302,108
Other current assets			33,453				32,396				34,319
Total current assets			1,717,439				1,440,103				1,495,174
PROPERTY AND EQUIPMENT, NET			1,062,456				1,018,636				962,258
GOODWILL AND OTHER INTANGIBLE ASSETS, NET			12,557				13,049				14,031
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET			43,342				62,288				76,145
TOTAL ASSETS		$	2,835,794			$	2,534,076			$	2,547,608
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt		$	47,671			$	41,300			$	62,275
Trade accounts payable			106,362				154,507				150,930
Deferred revenue and customers' advances			23,745				22,402				38,911
Other current liabilities			80,392				83,631				135,272
Total current liabilities			258,170				301,840				387,388
LONG-TERM DEBT			179,901				178,865				210,069
LONG-TERM CUSTOMERS' ADVANCES			30,285				31,209				40,893
DEFERRED TAX AND OTHER LONG-TERM LIABILITIES			18,626				11,057				20,717
TOTAL LIABILITIES			486,982				522,971				659,067
TOTAL SHAREHOLDERS' EQUITY			2,348,812				2,011,105				1,888,541
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,835,794			$	2,534,076			$	2,547,608

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars and share count in thousands, except per share data)

		Three months ended
		September 30,				June 30,				September 30,
		2023				2023				2022
REVENUES		$	358,167			$	357,191			$	427,087
COST OF REVENUES			271,299				270,674				302,576
GROSS PROFIT			86,868				86,517				124,511
OPERATING COSTS AND EXPENSES:
Research and development			20,176				19,452				22,406
Marketing, general and administrative			18,037				17,387				18,864
Restructuring cost (income, net) *			--				(851	)			4,033
Merger-contract termination fee, net **			(313,501	)			--				--
			(275,288	)			35,988				45,303
OPERATING PROFIT			362,156				50,529				79,208
FINANCING AND OTHER INCOME (EXPENSE), NET			9,975				3,924				(9,351	)
PROFIT BEFORE INCOME TAX			372,131				54,453				69,857
INCOME TAX EXPENSE, NET			(34,394	)			(5,747	)			(3,175	)
NET PROFIT			337,737				48,706				66,682
Net loss attributable to non-controlling interest			4,318				2,484				2,453
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	342,055			$	51,190			$	69,135
BASIC EARNINGS PER SHARE		$	3.10			$	0.46			$	0.63
Weighted average number of shares			110,302				110,088				109,416
DILUTED EARNINGS PER SHARE		$	3.07			$	0.46			$	0.62
Weighted average number of shares			111,242				111,234				110,825

*  Restructuring cost (income, net) resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022.

** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost.

RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	342,055			$	51,190			$	69,135
Amortization of stock based compensation			7,898				6,923				6,526
Amortization of acquired intangible assets			491				491				509
Restructuring cost (income, net) ***			--				(250	)			1,910
Merger-contract termination fee, net ****			(289,988	)			--				--
ADJUSTED NET PROFIT		$	60,456			$	58,354			$	78,080
ADJUSTED EARNINGS PER SHARE:
Basic		$	0.55			$	0.53			$	0.71
Diluted		$	0.54			$	0.52			$	0.70

*** Restructuring cost (income, net) resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022, net of taxes.

**** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost and tax.

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars and share count in thousands, except per share data)

		Nine months ended
		September 30,
		2023				2022
REVENUES		$	1,070,969			$	1,274,387
COST OF REVENUES			801,867				932,805
GROSS PROFIT			269,102				341,582
OPERATING COSTS AND EXPENSES:
Research and development			58,959				63,205
Marketing, general and administrative			54,053				61,402
Restructuring cost (income, net) *			(32,506	)			4,033
Merger-contract termination fee, net **			(313,501	)			--
			(232,995	)			128,640
OPERATING PROFIT			502,097				212,942
FINANCING AND OTHER INCOME (EXPENSE), NET			20,896				(19,646	)
PROFIT BEFORE INCOME TAX			522,993				193,296
INCOME TAX EXPENSE, NET			(55,182	)			(12,667	)
NET PROFIT			467,811				180,629
Net loss (income) attributable to non-controlling interest			(3,164	)			616
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	464,647			$	181,245
BASIC EARNINGS PER SHARE		$	4.22			$	1.66
Weighted average number of shares			110,118				109,165
DILUTED EARNINGS PER SHARE		$	4.18			$	1.64
Weighted average number of shares			111,184				110,691

* Restructuring cost (income, net) resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022.
** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost.

RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT		$	464,647			$	181,245
Amortization of stock based compensation			21,269				17,784
Amortization of acquired intangible assets			1,481				1,523
Restructuring cost (income, net) ***			(11,224	)			1,910
Merger-contract termination fee, net ****			(289,988	)			--
ADJUSTED NET PROFIT		$	186,185			$	202,462
ADJUSTED EARNINGS PER SHARE:
Basic		$	1.69			$	1.85
Diluted		$	1.67			$	1.83

***  Restructuring cost (income, net) resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022, net of taxes.

**** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost and tax.

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)

(dollars in thousands)

		Three months ended
		September 30,				June 30,				September 30,
		2023				2023				2022
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		$	318,195			$	304,934			$	211,177
Net cash provided by operating activities *			402,242				75,494				122,402
Investments in property and equipment, net			(101,080	)			(89,433	)			(45,134	)
Debt received (repaid) and others, net			15,493				(10,093	)			(28,164	)
Proceeds from an investment in a subsidiary			--				--				5,469
Effect of Japanese Yen exchange rate change over cash balance			(1,537	)			(5,322	)			(4,638	)
Investments in short-term deposits, marketable securities and other assets, net			(318,497	)			42,615				129,257
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	314,816			$	318,195			$	390,369

* Merger-contract termination fee received from Intel during the third quarter of 2023, net of cost, in the amount of $313,501 was included within the net cash provided by operating activities.

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

		Three months ended
		September 30,				June 30,				September 30,
		2023				2023				2022
CASH FLOWS - OPERATING ACTIVITIES
Net profit for the period		$	337,737			$	48,706			$	66,682
Adjustments to reconcile net profit for the period
to net cash provided by operating activities:
Income and expense items not involving cash flows:
Depreciation and amortization*			66,877				63,579				74,958
Effect of exchange rate differences and fair value adjustment			3,044				3,102				104
Other expense (income), net			(21	)			(149	)			7,950
Changes in assets and liabilities:
Trade accounts receivable			12,529				(21,241	)			3,991
Other assets			(4,099	)			2,114				527
Inventories			22,477				16,315				(25,510	)
Trade accounts payable			(58,107	)			(24,712	)			(15,951	)
Deferred revenue and customers' advances			419				(10,723	)			(16,906	)
Other current liabilities			(3,885	)			(5,479	)			20,725
Long-term employee related liabilities			191				267				(220	)
Deferred tax, net and other long-term liabilities			25,080				3,715				6,052
Net cash provided by operating activities **			402,242				75,494				122,402
CASH FLOWS - INVESTING ACTIVITIES
Investments in property and equipment, net			(101,080	)			(89,433	)			(45,134	)
Investments in deposits, marketable securities and other assets, net			(318,497	)			42,615				129,257
Net cash provided by (used in) investing activities			(419,577	)			(46,818	)			84,123
CASH FLOWS - FINANCING ACTIVITIES
Debt received (repaid), net			15,493				(10,093	)			(28,164	)
Proceeds from an investment in a subsidiary			--				--				5,469
Net cash provided by (used in) financing activities			15,493				(10,093	)			(22,695	)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE			(1,537	)			(5,322	)			(4,638	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(3,379	)			13,261				179,192
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			318,195				304,934				211,177
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	314,816			$	318,195			$	390,369

* Includes amortization of acquired intangible assets and stock based compensation in the amounts of $8,389, $7,414 and $7,035 for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

** Merger-contract termination fee received from Intel during the third quarter of 2023, net of cost, in the amount of $313,501 was included within the net cash provided by operating activities.

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