Tower Semiconductor Ltd. · NASDAQ:TSEM
Tower Semiconductor — Investor Day (March 2024)
64 slides from Tower Semiconductor's investor day presentation, Mar 19, 2024
Slide 1: Tower Semiconductor
Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of risks, uncertaintie
Slide 3: Agenda
CEO Keynote Agenda Russell Ellwanger, CEO Technology Leadership & Served Markets Dr. Avi Strum, CTO Operational Excellence Rafi Mor, COO Financial Strength Oren Shirazi, CFO Q&A Panel Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made
Slide 4: Partnership, Leadership, Impact, Innovation, Excellence
Partnership, Leadership, Impact, Innovation Excellence Russell Ellwanger, CEO
Slide 5: The heritage of the past is the seed of the future
Washington, D.C. Statue on the left of the main entrance to the National Archives of the United States bears the inscription: "The heritage of the past is the seed that brings forth the harvest of the future" Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished
Slide 6: Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties
Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 7: Should, Want, Is
WANT SHOULD IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 8: Our Vision
Our Vision: Provide the highest value analog semiconductor solutions as validated by our customers, employees, shareholders and partners. Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 9: The Corporate World
The Corporate World WANT SHOULD IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 10: The Corporate World
The Corporate World • Go out of business scenario • Selfish self-aggrandizing management • No corporate evolution WANT SHOULD • No sensitivity to the market • No ear to the customers IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or mad
Slide 11: The Corporate World
The Corporate World • No shared vision • No motivation SHOULD • Little innovation • Non-sustainable WANT IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 12: The Corporate World: Slave to the past
The Corporate World Slave to the past Lack courage to make WANT needed changes SHOULD IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 13: The beginning of a successful company
The beginning of a successful company WANT SHOULD IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 14: The Corporate World
The Corporate World Can increase degree of overlap by being: - Customers centric - Setting and evaluating WANT SHOULD realistic but stretch-goals with definitive metrics IS - Requires continual rapid cycles of learning Tower Semiconductor Confidential and Proprietary Information herein shall not be
Slide 15: The Corporate World
The Corporate World Even once aligned, market/customers insensitivity can cause them to move apart. A company must continually have: (1) The honesty to introspect and (2) the courage to change SHOULD WANT IS Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished t
Slide 16: Value Vectors
We pursue excellence in all we do from ideation Value Vectors through product shipment. Hence, we deliver the best experience to our customers and employees Being a trusted long-term Leading the analog ecosystem with Partnership Leadership partner for customers, technology and process solutions in e
Slide 17: Partnerships with InnoLight and Coherent
Tower Semiconductor and InnoLight Partner to Coherent Awards Tower Semiconductor as an Develop Multi-Generation Silicon Photonics Based Outstanding Innovation and Technology Supplier Optical Transceivers for Silicon Photonics based Products 400G/800G Transceivers built on Tower’s production PH18M To
Slide 18: 6 of the top 10 are our active customers
6 of the top 10 are our active customers (not Huawei). To note: Coherent is a result of an acquisition of Finisar. Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 19: Silicon Photonics: From Pluggable to CPO to Optical I/O
Silicon Photonics: From Pluggable to CPO to Optical I/O Silicon Photonics enables 100G/400G/800G • Higher Bandwidth (Gbps) 800G/1.6T • Lower Power (pJ/bit) • Lower Cost ($/Gbps) 3.2G/6.4T/12.8T 6.4T/12.8T & Beyond Source: ASE Tower Semiconductor Confidential and Proprietary Information herein shall
Slide 20: Value Vectors
We pursue excellence in all we do from ideation Value Vectors through product shipment. Hence, we deliver the best experience to our customers and employees Being a trusted long-term Leading the analog ecosystem with Partnership Leadership partner for customers, technology and process solutions in e
Slide 21: Financial Metrics of Excellence
Financial Metrics of Excellence • Effective ~ Gross Margin • High value offerings that enable customers at high capacity scale. • Efficient ~ Point drop from Gross Margin to Operating Margin • Tower is a benchmark at about 10 points • Streamlined infrastructure leads to fast decision making and fast
Slide 22: Financial Metrics of Excellence (cont.)
Financial Metrics of Excellence (cont.) • Highest Quality • Tower top 20% by ranking and rating has a benchmark low attrition rate Actual Actual 2023 2.4% 2015 2.2% 2022 3.0% 2014 3.8% 2021 3.4% 2013 3.4% 2020 1.5% 2012 4.4% 2019 2.4% 2011 2.6% 2018 0.9% 2010 2.2% 2017 3.7% 2009 2.3% 2016 0.5% Tower
Slide 23: Alice in Wonderland | Lewis Carroll
Alice in Wonderland | Lewis Carroll Alice approaching a crossroad, asked the Cheshire Cat Alice: “can you please tell me which way I ought to go from here?” Cat: “that depends a good deal on where you want to get to” Alice: “I don’t much care where” Cat: “then it doesn’t much matter which way you go
Slide 24: We know where we are going!
We know where we are going! Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 25: What is past is prologue
“What is past is prologue” We have a rich past, an introduction for each of us to write the most amazing new chapter in the book of Tower. Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 26: Technology Leadership and Served Markets
Technology Leadership and Served Markets Dr. Avi Strum, CTO
Slide 27: Tower Semiconductor (NASDAQ/TASE: TSEM)
Tower Semiconductor (NASDAQ/TASE: TSEM) 2023 Revenue Breakdown Analog Pure play foundry • Serving over 300 customers globally Misc., 2% Discrete, 15% Sensors & Displays, 20% Analog technology leadership • Focus on RF, Power, Sensors & Displays Serving a wide range of end-markets • Infrastructure, au
Slide 28: RF Infrastructure
RF Infrastructure Datacom, Telecom and Artificial Intelligence Misc., 2% Sensors & Displays, Discrete, 15% 20% Optical Fiber Transceivers Power IC, 24% RF Mobile, 22% HP SiGe and Si Photonics MS/ CMOS, 7% RF Infrastructure, 10% Tower Semiconductor Confidential and Proprietary Information herein shal
Slide 29: Growth of Optical Transceivers
Growth of Optical Transceivers > 100G Data Rate Ports • Historically our market has been exclusively 90 100G of SiGe optical transceiver components > 100G DATA RATE PORTS (MU) 80 200G (drivers, TIAs, CDRs) 70 400G 60 >=800G • Today, we are adding Silicon Photonics 50 40 components at higher data-rat
Slide 30: Linear Pluggable Optics boosting SiGe opportunity
Silicon Germanium: Linear Pluggable Optics (LPO) boosting SiGe opportunity DSP-based Transceiver Linear Drive (no DSP) Lower Cost Lower Power Analog Trasceiver Lower Latency Larger market for SiGe Source: Ruijie Networks Tower Semiconductor Confidential and Proprietary Information herein shall not b
Slide 31: Silicon Photonics Market
Silicon Photonics Market Tower New Sipho Design Tapeouts Rate (per month) 2018 2019 2020 2021 2022 2023 Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 32: SiPho based FMCW benefit for LiDAR
SiPho based FMCW benefit for LiDAR • FMCW LiDAR gives both the range (x, y, and z coordinates) and the relative velocity of SiPho surrounding objects, making it best suited for automotive applications • SiPho enables a compact integration of all optical elements of an FMCW LiDAR: laser sources, opti
Slide 33: Satellite based internet services
Satellite based internet services • Terrestrial receiver demand is growing User Terminal Examples • SiGe based phased-array are key enablers • ~250 phase-array ICs per terminal on average • 80M* new users expected over the next Shown for illustrative purpose only. Not an indication of Tower’s conten
Slide 34: Tower Collaborates with Renesas on SiGe Beamforming ICs
Tower Semiconductor Collaborates with Renesas to Manufacture SiGe-based Beamforming ICs for Tier-1 Customers in Satcom, 5G, and Aerospace & Defense Applications The Satcom terrestrial market is expected to grow to 150M users by 2031 according to Euroconsult with the expansion of global satellite-bas
Slide 35: RF Mobile
RF Mobile Wireless Front-End Components Built on RF SOI and RF SiGe Discrete, 15% Misc., 2% Sensors & Displays, 20% Power IC, 24% RF Mobile, 22% MS/ CMOS, 7% RF Infrastructure, 10% Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made pub
Slide 36: RF SOI figure of merit roadmap
RF SOI figure of merit roadmap • 200mm and 300mm wafer 250 QT1 RF SOI Ron-Coff (fs) sizes 200 • 180nm to 65nm nodes 150 • 4 factories in high volume + QT8 qualifying Agrate, Italy QT9/TPS90RSB 100 • Best-in-class FoM and QT10/TPS65RSC roadmap with low Ron-Coff 50 and high power handling 0 2012 2014
Slide 37: RF Mobile Market
RF Mobile Market Wireless Front-End Built on 5G adoption drives steady growth in RF RF SOI and RF SiGe Platforms content with 6G coming by 2030 Global Smartphone Shipments & 5G RF Switch RF SOI Adoption Antenna Tuner RF SOI 1,600 SMARTPHONE SHIPMENTS (MU) 1,400 Low-noise Amplifier SiGe / RF SOI 1,20
Slide 38: Power and Mixed-Signal
Power and Mixed-Signal Largest Analog Market Misc., 2% • $24B 2024 Power IC market per Yole Discrete, 15% Sensors & Displays, 20% Serving all major Semi Segments • Automotive • Industrial • Consumer Power IC, 24% RF Mobile, 22% • Infrastructure MS/ CMOS, 7% RF Infrastructure, 10% Tower Semiconductor
Slide 39: Power IC Market (~$24B Total)
Power IC Market (~$24B* Total) Newer 300mm Markets for Tower • 65nm BCD with best-in-class Rdson/efficiency • Mobile, battery operated applications Traditional 200mm Markets for Tower • 180nm BCD with rich analog features • Automotive, Industrial, and Infrastructure applications 5V 12V 24V 48V 120V
Slide 40: TPS65PM Modularity
TPS65PM Modularity • Tower’s 65nm BCD technology is based on a modular process that potentially has more than 1000 BEOL different flavors 2~6 Cu Top 0.9 or 3.3um • It covers a wide range of Power & Analog applications with best-in-class FOMs Power Devices LDMOS, DEMOS 1.2V Core Trans. (MOS, stdcell,
Slide 41: Sensors and Displays
Sensors and Displays CMOS Image Sensors High-Value Markets Misc., 2% • Medical Discrete, 15% Sensors & Displays, 20% • Industrial • Automotive Power IC, 24% uLED Display Solutions RF Mobile, 22% Emerging, Growth Markets • AR/VR • High Resolution Displays MS/ CMOS, 7% RF Infrastructure, 10% Tower Sem
Slide 42: CMOS Image Sensor market overview
CMOS Image Sensor market overview 2027 $3.6B $2.9B $19.5B $3.2B 2023 $2.5B $2B $1.9B $0.9B $15.2B $2.1B CAGR 6.7% $0.9B $0.7B $0.6B $0.5B $1.9B $1B Source: Yole Tower Semiconductor Confidential and Proprietary Information herein shall not be furnished to third parties or made public
Slide 43: High Value CIS Markets
High Value CIS Markets Medical and Dental X-Ray • Intra and Extra Oral • Mammography High value wafers due to • Surgical unique stitching technology • Up to 21cm x 21cm (1 DPW) for large sensors High-end Photography • Cinematography • Broadcasting High value wafers due to • High end photography uniq
Slide 44: Emerging High Growth Sensor and Display Markets
Emerging High Growth Sensor and Display Markets Biometrics • Optical fingerprint lens-type sensors Driven mainly by the mobile • Face recognition (iToF) market • Palm recognition 3D sensing • Automotive (dToF) Driven by high growing • Gaming (iToF/dToF) markets such as automotive • AR/VR depth senso
Slide 45: Stitching technology
Stitching technology Full 12’’ sensor • Large Scale image sensor process using stitching • 2 masks solutions : A B Full 8” wafer size Mask A Mask B Print on silicon • Single mask solution Mask Print on silicon – no size limitation 48x36 44x33 1/10”1/3” 1/4” 1/2” 2/3” 1” 4/3” APS (3:2) 35 mm Non-Stit
Slide 46: Operational Excellence
Operational Excellence Rafi Mor, COO
Slide 47: Tower Operational Strategy
Tower Operational Strategy ❖Leverage Tower Global operations to pursue excellence in all what we do. ❖Quality, efficiency and effectiveness are the pillars of excellence and are indispensable to each other. We continually drive: • Highest standards of quality • Efficiency in processes, systems and p
Slide 48: Adding significant 300mm capacity to grow scale
Adding significant 300mm capacity to grow scale • Six factories in high-volume production • Two additional 300mm factories being qualified to meet forecasted growing demand with biz models minimizing time to volume and cost. Migdal Haemek, Israel Migdal Haemek, Israel Newport Beach, USA San Antonio,
Slide 49: Tower Operations - Global capacity assurance
Tower Operations - Global capacity assurance • 3.1M Wafers / Year (200mm equivalent). Enabling 200mm and 300mm multi-fab wafer production. Fab11 • Cross Qualification answer customers BCP needs and maximized Fab10 Fab7 utilization and customer assurance • Fab-10 started production ramp in Q1 2024. •
Slide 50: Operational Excellence – Best in class KPIs among Analog Fabs
Operational Excellence – Best in class KPI’s among Analog Fabs Capacity & High Asset utilization of ≥85%, with minimal affect on fab performance 1 Utilization Duplicate major flows between Fabs to increase operational flexibility. OSD & 2 Cycle Time Strive for Best in benchmark OSD and Cycle time .
Slide 51: Operational Excellence - Improve Operational Efficiency
Operational Excellence - Improve Operational Efficiency Global Contracts Long Term Contracts Centralized Capex Shared Resources Leverage With Power Move the best Package deals Company & Bulk Gases with OEM experts from site Size suppliers. and 2nd source vendors. to site. Reengineering Shared Best P
Slide 52: Global platform
Global platform Enabling operation to improve the quality and efficiency by learning proactively from other sites and solved problems faster by consulting organization experts Data search – search information on events, change control, articles, non-conforming material, etc. Common tools –Identify t
Slide 53: E-learnings and web-based trainings for global operations
Develop E-learnings, WEB based trainings to improve the skills of all employees in the global operations Trainings were developed for the following topics: Knowledge sharing, CCB, non-conforming material , Measurement system analysis, Crash, Overall Equipment Effectiveness (OEE), Basic statistics, s
Slide 54: Tower Semiconductor is Going Green
Tower Semiconductor is Going Green, Results also in increase Efficiency TSEM broadening its presence into renewable energy and green initiatives. Invested in key projects which enables improvement in water and electricity usage. Reduction in power usage by Waste Reduction: Global initiatives to redu
Slide 55: The Best Confidence Builder is High Yielding Wafer Shipped on Time
The Best Confidence Builder is High Yielding Wafer Shipped on Time • Large Capacity Globally and High Assets Utilization: Quality technologies at multiple TowerJazz Sites to utilize all Fabs at >85%, allowing us to better serve increasing customer demand. • Reduced Lead Time: To shorten Time to Mark
Slide 56: Financial Strength
Financial Strength Oren Shirazi, CFO
Slide 57: Financial Model ($M)
Financial Model ($M) Incremental Built-out capacity 2023 % of @85% utilization* $M Incremental Revenue Revenue 1,423 1.9X 2,660 1,237 Gross Profit 354 2.1X 740 386 31% Operating 234 ** 2.4X 560 326 26% Profit Net Profit 229 ** 2.2X 500 271 22% * Including New Mexico capacity corridor and Agrate capa
Slide 58: Annual Revenue
Annual Revenue (5-year Tracking & 2023) 1423 1266 961 $M 509 102 2005 2010 2015 2020 2023 Tower Semiconductor Confidential and Proprietary 58 Information herein shall not be furnished to third parties or made public
Slide 59: Balance Sheets ($ in million)
Balance Sheets ($ in million) December 31, 2023 September 30, 2023 December 31, 2022 CURRENT ASSETS Cash and cash equivalents 261 315 341 Short-term deposits 791 735 495 Marketable securities 185 179 170 Trade accounts receivable 154 150 153 Inventories 282 304 302 Other current assets 36 34 34 Tota
Slide 60: Cash Reports ($ in million)
Cash Reports ($ in million) Q4‘23 Q3’23 Q4‘22 Cash opening balance, excluding securities & deposits 315 318 390 Cash from operating activities 126 402 * 133 Cap-Ex, net (136) (101) (38) Investments in securities, deposits & long-term assets (37) (318) (150) Debt repaid and others, net (7) 14 6 Cash
Slide 61: FY'23 P&L vs. FY'22 P&L
FY‘23 P&L vs. FY’22 P&L (in thousands of $) Year ended December 31, 2023 2022 REVENUES $ 1,422,680 $ 1,677,614 COST OF REVENUES 1,069,161 1,211,306 GROSS PROFIT 353,519 466,308 OPERATING COSTS AND EXPENSES: Research and development 79,808 83,911 Marketing, general and administrative 72,454 80,282 Re
Slide 62: Q4'23 P&L vs. Q3'23 and Q4'22 P&L
Q4‘23 P&L vs. Q3’23 and Q4’22 P&L (in thousands of $) Thre e mo nths e nde d December 31, September 30, December 31, 2023 2023 2022 REVENUES $ 351,711 $ 358,167 $ 403,227 COST OF REVENUES 267,294 271,299 278,501 GROSS PROFIT 84,417 86,868 124,726 OPERATING COSTS AND EXPENSES: Research and developmen
Slide 63: Financial Model ($M)
Financial Model ($M) Incremental Built-out capacity 2023 % of @85% utilization* $M Incremental Revenue Revenue 1,423 1.9X 2,660 1,237 Gross Profit 354 2.1X 740 386 31% Operating 234 ** 2.4X 560 326 26% Profit Net Profit 229 ** 2.2X 500 271 22% * Including New Mexico capacity corridor and Agrate capa
Slide 64: Thank You
Thank You www.towersemi.com