Tower Semiconductor Q3 Profit Jumps as Q4 Revenue Guidance Centers on $600 Million

Tower Semiconductor Ltd. (NASDAQ: TSEM) reported a sharp increase in third-quarter 2026 earnings as revenue grew by roughly one-third from a year earlier. The company also projected fourth-quarter revenue of $600 million at the midpoint, which would represent 36% year-over-year growth and a 14% sequential increase.

Revenue for the quarter ended September 30 rose to $526.2 million from $395.7 million a year earlier and $460.1 million in the second quarter. GAAP net profit attributable to the company reached $120.3 million, or $1.05 per diluted share, compared with $53.6 million, or $0.47 per diluted share, in the prior-year period.

Profitability expanded faster than revenue. Gross profit increased to $178.8 million from $93.0 million a year earlier, lifting the gross margin to about 34.0% from 23.5%. Operating profit more than doubled to $127.1 million from $50.6 million, while the operating margin rose to approximately 24.2% from 12.8%.

On a sequential basis, gross profit increased from $137.8 million and operating profit rose from $90.3 million. Third-quarter net profit attributable to Tower was up from $90.8 million in the second quarter.

Adjusted net profit, which excludes stock-based compensation and amortization of acquired intangible assets, was $131.3 million, or $1.15 per diluted share. That compared with $62.8 million, or $0.55 per diluted share, a year earlier and $100.7 million, or $0.88 per diluted share, in the preceding quarter.

Nine-Month Results

For the first nine months of 2026, Tower generated revenue of $1.40 billion, up from $1.13 billion in the same period of 2025. Gross profit increased to $427.5 million from $246.2 million, while operating profit rose to $282.0 million from $123.3 million.

Nine-month GAAP net profit attributable to the company was $276.1 million, or $2.41 per diluted share, nearly double the $140.3 million, or $1.24 per diluted share, reported a year earlier. Adjusted net profit increased to $306.5 million from $170.4 million, with adjusted diluted earnings per share rising to $2.68 from $1.50.

Fourth-Quarter Outlook

Tower forecast fourth-quarter revenue of $600 million, plus or minus 5%, implying a range of approximately $570 million to $630 million. The company said the midpoint would represent 36% growth from the fourth quarter of 2025 and 14% growth from the third quarter of 2026. The presentation did not provide fourth-quarter profit or margin guidance.

Balance Sheet

Tower ended September with $251 million in cash and cash equivalents and $1.22 billion in short-term deposits, compared with $235 million and $917 million, respectively, at the end of 2025. Property and equipment increased to $1.83 billion from $1.46 billion over the same period, contributing to a rise in total assets to $4.02 billion from $3.32 billion.

Customer prepayments and deferred revenue increased to $249 million from $26 million, while long-term customer advances rose to $92 million from $2 million. Total liabilities increased to $809 million from $417 million, and shareholders’ equity rose to $3.21 billion from $2.91 billion. Short- and long-term debt totaled $153 million at the end of the quarter.

Tower cautioned that its outlook depends on factors including customer demand, fab utilization and cross-utilization, end-market conditions, and market and technology trends. The company said actual revenue, margins, cash flow and net profit could differ materially from current expectations because of the risks and uncertainties described in its regulatory filings.