Tower Semiconductor (TSEM) investor relations material

Executive summary

• Achieved record Q2 2026 revenue of $460M, up 24% year-over-year, with net profit of $91M and gross profit of $138M, reflecting strong growth and profitability.

• Q3 2026 revenue guidance is $520M (+/- 5%), representing 13% sequential and 31% year-over-year growth, with management committed to continued quarterly growth.

• Updated 2028 model targets $3.6B revenue, $1.63B gross profit (45% margin), and $1.2B net profit (33% margin), reflecting higher efficiency and profitability, assuming 85% fab utilization.

• Strategic expansions in Japan (dual-track 300mm capacity) and global CapEx plans are expected to quadruple 300mm output and support long-term growth.

• Strong growth is driven by customer partnerships, rich product mix, and operational execution, with robust demand across key business units.

Financial highlights

• Q2 2026 revenue: $460M, up 11% sequentially and 24% year-over-year; gross profit: $138M (30% margin), up 72% year-over-year.

• Operating profit: $90M, more than double prior year; net profit: $91M (20% margin), up 95% year-over-year.

• EPS: $0.80 basic, $0.79 diluted; adjusted net profit: $100.7M, adjusted EPS: $0.89 basic.

• H1 2026 revenue: $873.7M, net profit: $155.8M, both significantly up year-over-year.

• Free cash flow for Q2 2026 was negative due to high capital investments, despite strong operating cash flow.

Outlook and guidance

• Q3 2026 revenue guidance: $520M, annualized run rate above $2B, up 31% year-over-year and 13% sequentially.

• 2028 model: $3.6B revenue, $1.63B gross profit (45% margin), $1.2B net profit (33% margin), fully backed by customer commitments.

• Margin expansion expected to continue, driven by efficiency and product mix.