Tower Semiconductor recently posted its second-quarter financial outcomes, which revealed 8 percent growth in its gross profit from 2019. Seeking Alpha noted the firm weathered the impact of the coronavirus pandemic because of its healthy product mix. The company also expressed confidence its business will continue to expand in the third quarter.
Tower Semiconductors Q2 Results
In the three months ending June 30, Tower Semiconductor earned $310 million in revenue and $57.7 million in gross profit. By comparison, the manufacturer made $306 million with $53.4 million in gross income in the same period last year. The firm’s financial outcomes accorded with the guidance it issued in May and beat Wall Street’s revenue estimate by 1.3 percent.
Seeking Alpha published a report stating Tower Semiconductor’s automotive and medical chip sales took a hit from the global health crisis. However, robust demand for the company’s mobile device and power management components offset weakness in its other segments.
In an investor call, CEO Russell Ellwanger mentioned his firm’s second-quarter sales benefited from increased purchases from data center providers. The executive also said recent 5G network deployments buoyed his company’s telecom gear component revenue.
Tower Semiconductor’s Strong Q3 Outlook
For the third quarter, Tower Semiconductor expects to report in $320 million in sales. Since the company made $312 million in Q3 2019, it anticipates growing its business by 2.5 percent year-over-year growth and 3.22 percent quarter-over-quarter.
The executive noted Tower Semiconductor’s spike in foundry utilization supports its positive outlook for the September-ending period.
As with Q2, the firm’s annual expansion is the result of its product mix. Ellwanger said his company is increasing its share of RF SOI and power management part markets. He also noted Tower Semiconductor’s SiGe BiCMOS manufacturing process, which can produce robust 5G networking components, is rising now in popularity among its clients.
Earlier this month, TrendForce reported 5G smartphones would represent 18.9 percent of the global handset market in 2020. The group explained Chinese wireless carriers are driving adoption of the new technology with network expansions. Since the country is the world’s largest smartphone market, its embrace of 5G should bolster sales for all next-generation telecom components suppliers.
As Tower Semiconductor utilizes a well-regarded 5G semiconductor manufacturing process, its growth trend could persist through the fourth quarter.