A maker of specialty microchips, Tower Semiconductor runs "foundry" factories that manufacture analog and mixed-signal chips designed by other companies — the silicon inside everything from smartphone image sensors to power-management and radio-frequency gear. Founded in 1993 in Migdal Haemek, Israel, it grew out of a chip plant National Semiconductor had operated and took the name "Tower" from that facility. After merging with California's Jazz Semiconductor in 2008, it briefly called itself TowerJazz before returning to the Tower name in 2020.
20-F · Fiscal year ended Dec 31, 2025 · SEC filing ↗
Revenue rose 9% to $1.57B on higher wafer shipments, but gross margin slipped and free cash flow turned negative as capex ramped.
Tower Semiconductor returned to growth after a two-year decline. Revenue rose 9% to $1.57 billion, but narrowed to 23.2% and swung to negative $12.5 million as the company poured $444 million into capacity expansion. The company is betting its future on a $920 million plan, even as geopolitical conflict threatens tool installation and a patent lawsuit looms.
Key takeaways
rose 9% to $1,566.1 million, driven by higher wafer shipments and the first full year of volume production from the Agrate, Italy 300mm facility, which contributed only a partial quarter in 2024.
increased $24.5 million to $363.9 million, but declined 0.4 points to 23.2% as a $105.6 million rise in cost of —from higher and manufacturing costs—outpaced revenue growth.
was nearly flat at $194.2 million, up only $2.9 million, as the gain was largely offset by higher R&D and SG&A expenses and the absence of a $6.3 million restructuring income recorded in 2024.
What changed
The decline flagged in 2023 reversed: after falling 15% in 2023, revenue stabilized with a 0.9% increase in 2024 and accelerated to 9% growth in 2025, reaching $1.57 billion.
continued to erode rather than stabilize: the 24.8% margin in 2023 fell to 23.6% in 2024 and 23.2% in 2025, as rising and manufacturing costs from capacity expansions outpaced gains.
The 300mm capacity expansion with ST in Agrate, Italy, previously flagged as a watch item, began contributing , with 2025 marking its first full year of volume production.
What to watch
Resolution of the Israel tool installation bottleneck caused by the February 2026 conflict, and whether it delays the $920 million SiPho and SiGe capacity expansion.
Closing of the TPSCo restructuring to take full ownership of Fab 7 and divest Fab 5, targeted for April 2027, and any customer disruption during the transition.
Outcome of the GlobalFoundries patent infringement lawsuits filed in March 2026 in the U.S. ITC and Texas federal court.
Section summaries
Quantitative and Qualitative Disclosures About Market Risk
Company faces FX risk from JPY, NIS, and Euro operations, partially hedged via cylinder/forward contracts; interest-rate risk is minimal.
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Interest-rate risk is low: cash equivalents and short-term deposits have short maturities, and the $92M 2024 JPY Loan and $29M in equipment leases carry fixed ~2% rates.
A 10% change in market interest rates would have an immaterial impact on capital leases and loans.
Foreign-exchange exposure arises mainly from operations in Japan (JPY), Israel (NIS), and Italy (Euro), with revenues and costs in local currencies.
attributable to the company rose 6% to $220.5 million, aided by a $5.9 million increase in financing income from hedging gains and a $14.2 million decrease in other expense.
swung from a positive $12.5 million in 2024 to a negative $12.5 million, as $395.5 million in was more than consumed by $436.5 million in net property and equipment investments.
Customer concentration remains high: NTCJ accounted for 11% of 2025 revenues and seven other customers each contributed 4–7%, collectively representing 50% of revenues.
The Fab 3 lease dispute, previously flagged for resolution before 2027, escalated: the filing now states the landlord claims a material non-curable lease breach and a third party asserts collateral rights over the site.
A new and material risk emerged: the February 2026 US-Iran-Israel-Hezbollah conflict is preventing vendors from traveling to Israel to install and qualify tools, directly threatening the execution of the $920 million plan.
Progress on the potential new 300mm fab shell in Uozu, Japan, contingent on METI subsidy approval and customer demand commitments.
TPSCo’s natural JPY -cost match limits USD/JPY exposure, supplemented by cylinder hedges; a 10% JPY appreciation would lower quarterly profit by ~$5M before hedging.
A 10% NIS appreciation would increase quarterly Israeli operating expenses by ~$4M, and a 10% Euro appreciation would increase Italian expenses by ~$1M, both partially offset by cylinder/forward hedges.
As of Dec 31, 2025, ~$57M in JPY cash equivalents partially mitigates JPY debt exposure; a 10% JPY appreciation would not materially affect the balance sheet.
Tower faces material risks from capacity expansion execution, geopolitical conflict disrupting tool installation, and customer/revenue concentration.
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A $920M plan to expand SiPho and SiGe capacity faces delays because the February 2026 US-Iran-Israel-Hezbollah conflict prevents vendors from traveling to Israel to install and qualify tools.
The planned restructuring of Japan operations (TPSCo) to take full ownership of 7 and divest Fab 5 may not close by April 2027 or at all, and could disrupt customer relationships.
A potential new 300mm shell build-out in Uozu, Japan is contingent on METI subsidy approval, funding, and future customer demand, with no assurance any of these will materialize.
Customer concentration is significant: in 2025, NTCJ accounted for 11% of revenues and seven other customers each contributed 4–7%, collectively representing 50% of revenues.
GlobalFoundries filed three patent infringement lawsuits against the Company in March 2026 in the U.S. ITC and Texas federal court, which the Company disputes.
The 3 landlord claims a material non-curable lease breach, and a third party asserts collateral rights over the site, threatening operations at the Newport Beach facility.
Tower Semiconductor is a pure-play independent specialty foundry providing high-value analog/mixed-signal wafer fabrication and design services.
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The company operates six fabrication facilities (Fabs 2, 3, 9, 10, and TPSCo's Uozu and Tonami) producing wafers on 200mm and 300mm platforms with geometries from 0.80-micron to 65nm.
Its core specialty technologies include Silicon Photonics (SiPho), SiGe BiCMOS, RF SOI, power management ICs, and CMOS image sensors, targeting markets like AI/data center communications, smartphones, and automotive.
A strategic restructuring of Japan operations, targeted to close April 2027, will give Tower full ownership of the 300mm Fab 7 while NTCJ takes the 200mm Fab 5, with mutual long-term supply agreements.
The company is executing a $920 million plan primarily to expand SiPho and SiGe capacity, with some customers providing prepayments for committed capacity through 2028.
For 2025, 11% of came from NTCJ, 39% from seven other large customers, and 50% from many smaller customers, with 42% of revenue from the United States and 39% from Asia (excluding Japan).
Tower competes with specialty foundries like GlobalFoundries and X-Fab, and also with advanced pure-play foundries like TSMC, differentiating through specialized analog process technologies and design enablement services.
Revenue grew 9% to $1.57B driven by higher wafer shipments and the first full year of Agrate 300mm output, while net profit rose 6%.
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increased $130.0 million, or 9%, to $1,566.1 million, primarily due to higher wafer shipments and the inclusion of a full year of volume production from the Agrate, Italy 300mm facility versus only a partial quarter in 2024.
rose $24.5 million to $363.9 million, but declined slightly to 23.2% from 23.6% as a $105.6 million increase in cost of , driven by higher and manufacturing costs, outpaced revenue growth.
increased marginally by $2.9 million to $194.2 million, as a $24.5 million gain was largely offset by higher R&D and SG&A expenses and the absence of a $6.3 million restructuring income recorded in 2024.
attributable to the company grew $12.6 million to $220.5 million, aided by a $5.9 million increase in financing income from hedging gains and a $14.2 million decrease in other expense, partially offset by a higher income tax expense.
The company invested $444 million in property and equipment and has initiated a $920 million capital expenditure plan to expand SiPho and SiGe capacity, while also exploring a potential new 300mm fab shell build-out in Japan contingent on METI subsidy approval.
Cash and cash equivalents decreased to $235.4 million from $271.9 million, with $395.5 million in offset by $436.5 million in net property and equipment investments.