> ## Content Index
> Fetch the complete content index at: https://www.bullished.co/llms.txt
> Use this file to discover other available public pages before exploring further.

# Tower Semiconductor Targets $1.2 Billion Annual Net Profit In Updated Model, $450 Million Above February's
- URL: https://www.bullished.co/tower-semiconductor-targets-1-2-billion-annual-net-profit-in-updated-model-450-million-60987b74/
- Published: 2026-11-02T17:00:57.000Z
- Updated: 2026-11-02T17:00:57.000Z
- Description: The chip foundry's CEO says silicon photonics capacity is "spoken for" through 2029, and calls the new $3.6 billion revenue target aggressive.
- Author: Matteo Parrino
- Tags: Earnings, TSEM, Industry: Technology

[Tower Semiconductor](https://www.bullished.co/tag/tsem/), a specialty chip foundry, now targets [$3.6 billion in annual revenue](https://www.globenewswire.com/news-release/2026/11/02/3392999/0/en/tower-semiconductor-reports-third-quarter-record-results-providing-record-fourth-quarter-guidance-resulting-in-2026-2-billion-annual-revenue.html?ref=bullished.co) and $1.2 billion in annual net profit, Chief Financial Officer Oren Shirazi said on the company's third-quarter earnings call Monday. Chief Executive Russell Ellwanger said silicon photonics capacity is "spoken for" through contracts that now run to 2029.

## A bigger long-term model

The updated model puts revenue $760 million above the February target. Net profit of $1.2 billion is $450 million higher than before, for a 33% net margin against 26% in the prior model.

Shirazi set gross margin at 45% and operating margin at 38%, versus 39% and 32% earlier. The model assumes every fab runs at 85% utilization once the $920 million expansion of silicon photonics and silicon-germanium capacity is fully installed and qualified.

An analyst asked whether the targets were already too conservative. Ellwanger first answered "No comment," then said "I think it's an aggressive target," adding that management would not give the street a target it lacked "very, very high confidence" of meeting.

On the quarter, revenue was a [record $526 million](https://www.globenewswire.com/news-release/2026/11/02/3392999/0/en/tower-semiconductor-reports-third-quarter-record-results-providing-record-fourth-quarter-guidance-resulting-in-2026-2-billion-annual-revenue.html?ref=bullished.co) against $460 million in the second quarter, and net profit was $120 million, a 23% margin. Gross profit rose to $179 million from $93 million a year earlier. Fourth-quarter revenue guidance is a midpoint of $600 million.

## Capacity committed through 2029

Silicon photonics, the technology that moves data as light inside AI data centers, produced about $240 million of third-quarter revenue. Ellwanger said start capacity should reach about three times the level behind those shipments by the third quarter of 2027, with the Track 1 300-millimeter expansion included. That puts baseline silicon photonics revenue "a bit above a 2.8 billion run rate," excluding integrated-laser products.

The demand is covered, he said, through signed agreements and contracts in advanced negotiation. He added that the last contracts are being signed now, and that all expansion is meant to be self-funded.

Pressed on rivals, Ellwanger said Tower is "engaged in billions of dollars of long-term agreements" and that customers would not commit through 2029 without faith in its roadmap. He declined to forecast market share. President Marco Racanelli said room exists for more than one player in a fast-growing market.

Ellwanger said Tower will most likely announce more silicon photonics expansion shortly, mainly at two 200-millimeter sites. He expects an appreciable amount of near-package optics, a new chip form factor, to ship in the second half of next year, depending on market adoption.

## Margins and the balance sheet

An analyst noted a 62% incremental gross margin in the quarter. Shirazi said only about 65% of the $920 million of tools had begun depreciating, and the long-term model assumes 55% to 58%.

Customer prepayments, mostly for 2027 capacity and including the previously announced $290 million, sit on the balance sheet as customer advances. Shareholders' equity reached a record $3.2 billion, 80% of $4 billion in assets.

About 65% of the $920 million has been paid. The rest is due in the fourth quarter and the first half of 2027.

Ellwanger said Tower will present at Barclays' conference in San Francisco on December 10.

Learn

- [How To Read An Earnings Call Transcript: Start With Guidance, Then Find What's Missing →](https://www.bullished.co/learn/how-to-read-an-earnings-call/)  
How to read an earnings call transcript: check guidance first, look for dropped metrics, compare growth with last quarter, and watch hedged wording.

### Sources

- [Tower Semiconductor CEO Says the Company's Biggest Growth Phase Has Arrived](https://www.benzinga.com/markets/earnings/26/11/62778839/tower-semiconductor-ceo-says-the-companys-biggest-growth-phase-has-arrived?ref=bullished.co) — benzinga.com
- [Tower Semiconductor: Q3 Earnings Snapshot – WTOP News](https://wtop.com/national/2026/11/tower-semiconductor-q3-earnings-snapshot/?ref=bullished.co) — wtop.com
- [Tower Semiconductor beats top-line and bottom-line estimates; gives Q4 outlook | Seeking Alpha](https://seekingalpha.com/news/4662058-tower-semiconductor-beats-top-line-and-bottom-line-estimates-gives-q4-outlook?ref=bullished.co) — seekingalpha.com
- [Tower Semiconductor rises as strong forecast signals record growth phase (TSEM:NASDAQ) | Seeking Alpha](https://seekingalpha.com/news/4662090-tower-semiconductor-rises-as-strong-forecast-signals-record-growth-phase?ref=bullished.co) — seekingalpha.com
- [Tower Semiconductor Reports Third Quarter Record Results,](https://www.globenewswire.com/news-release/2026/11/02/3392999/0/en/tower-semiconductor-reports-third-quarter-record-results-providing-record-fourth-quarter-guidance-resulting-in-2026-2-billion-annual-revenue.html?ref=bullished.co) — globenewswire.com

### More on Tower Semiconductor

- [Tower Semiconductor Stock Plunges 8%, Wiping Out $1.6 Billion, Despite Record Quarter](https://www.bullished.co/tower-semiconductor-stock-plunges-8-wiping-out-1-6-billion-despite-record-quarter-5b61d10b/)
- [Tower Semiconductor Guides Fourth Quarter To $600 Million After Record $526 Million Third Quarter](https://www.bullished.co/tower-semiconductor-guides-fourth-quarter-to-600-million-after-record-526-million-third-1ec6f7e7/)
- [BlackRock Reports 6.8% Passive Stake In Tower Semiconductor, 7.77 Million Shares](https://www.bullished.co/blackrock-reports-6-8-passive-stake-in-tower-semiconductor-7-77-million-shares-cd338369/)

[All Tower Semiconductor (TSEM) coverage →](https://www.bullished.co/tag/tsem/)