Q2 2025 Tower Semiconductor Ltd Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Tower Semiconductor second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Then we'll have a presentation followed by the question and answer session, at which time if you wish to ask a question, you will need to press *1, 1 on your telephone keypad and wait for your name to be announced.
A mass advisor that this conference has been recorded today.
I would like to hand the conference over to a speaker today, Miss Noit Levy.
Senior Vice President of Investor Relations and Human Resources. Please go ahead, Madam.
Thank you, and welcome to Tower's second quarter 2025 financial results conference call.
Today may be forward-looking and subject to risks and uncertainties that could cause actual results to differ materially. These risks are detailed in our SEC filings, Form 20-F and 6-K, as well as filings with the Israeli Securities Authorities, all available on our website. Tower assumes no obligation to update forward-looking statements.
Our second quarter 2025 results are prepared in accordance with U.S. GAAP.
Some data presented may include non-GAAP financial measures as defined under Regulation G. Reconciliations to GAAP figures and full explanations are provided in today's press release and financial tables.
Please note that we have a supporting slide deck that is available on our website and integrated into this webcast with that. I'd like to turn the call over to our CEO Mr. Russell Alan. Girl Russell,
Thank you know.
Thank you all for joining us today.
For our second quarter of 2025 earnings call.
We delivered strong results. In the second quarter, with revenues of $372 million,
and a result in net profit of $46.6 million.
We got our third quarter revenues to be $395 million.
Plus minus 5%.
And additionally, target a revenue increase of over $40 million for the fourth quarter compared to the third.
Q3 guidance and Q4 expectations validate our onset. 2025 target of sequential quarter-over-quarter growth throughout the year, with acceleration in the second half.
We announced that years begin a repurposing of multiple factors predominantly towards higher capacity, for RF infrastructure, namely, silicon geranium, and silicon photonics.
This is well underway with Q3 and Q4 expected. Growth is the first fruits of the execution of this strategy.
Demand not only remains very strong.
But it is consistently growing, as is our increase in both silicon geranium and cipo capacity and associated customer qualifications.
We continue to invest in capacity and also R&D advanced capability cap backs throughout 2025.
With further capacity and capability growth planned for 2026.
Aligned to our customers' forecasted demands.
Confident.
In maintaining our number one market share position in this growing and significant optical transceiver market.
Let's review our second quarter 2025 revenue breakdown, along with some context that highlights key trends and momentum shaping our performance for the full year.
Kindly refer to slide number 4 for a detailed breakdown of our quarterly revenue figures.
Most notable is growth in our RF infrastructure. Business attributed to data center and AI expansions.
served by our silicon photonics and silicon germanium technologies predominantly for optical fiber communications.
In the second quarter, RF infrastructure represented 25% of corporate revenues.
Over 90 million, in revenues.
Up from 14% in the same period of 2024.
And expected to significantly increase over the next period.
Specific to silicon geranium, we began volume production shipments from San Antonio Fab 9 for a Tier 1 customer.
And as well, volume wafer starts in Israel. Fab 2 for another Tier 1 customer is providing a substantial capacity increase in this growing market, on top of the high capacity in our Newport Beach facility.
Which itself is realizing capacity increases this year.
We have also made silicon germanium design kits available in our 300 mm Japan Factory Fab 7.
For which an additional Tier 1 customer is presently in the design phase.
Silicon photonics, in addition to our existing volume on 400 and 800 gigabits per second.
Current wafer starts now include a good ramp on 1.6 terabits per second as the industry continues to move aggressively to higher speeds.
Which is expected to further help market penetration of silicon photonics over legacy EML solutions.
Expanding our opportunity due to the cost and strong performance benefits of silicon photonics.
Year's total.
This growth demonstrates our platform maturity, strong customer adoption, and operational scalability.
Today.
Most silicon photonic products we manufacture serve the transmit function in an optical transceiver module.
This quarter, we successfully prototyped a new 300 mm silicon photonics technology that enables a cost and performance advantage to the receive function in an optical transceiver module.
This new technology is expected to see initial production in the fourth quarter of this year, expanding the market served by our silicon photonics technology beyond that which we serve today.
By leveraging the majority of features in our mature ciple platform and adding evolutionary customer-partnered improvements to this base process, we've been able to quickly wrap up and achieve high yields for 200 gigabit per second lanes and 1.6 terabit per second optical transceiver products.
The transition from 400 gigabits per second lanes to 3.2 terabits per second requires additional and fundamental device process improvements and new materials, which Tower is aggressively pursuing together with Tier 1 customers.
The first of these platforms is anticipated to ramp up as early as mid-2026.
Slide 5 shows cumulative wafer bill to date for 400g, 800g, and 1.6t speed.
Presently, we are manufacturing similar amounts of each offering.
Looking at prototypes, there's further acceleration of 1.6T with 40% higher year-to-date pros at 1.6.
Above 400G and 800G combined, serving multiple large customers.
We are seeing recovery in our RF mobile business. Specifically in RFS OI, which showed a Q2 to Q1 revenue increase of over 20% and is expected to show further increases close to 30% Q3 over Q2, targeting further increase in Q4.
We've gained momentum with a new North America Tier 1 customer now prototyping several products on RF SOI and our 300-millimeter facilities in both Japan and Italy.
Beyond RFS oi we're innovating with other RF switch Technologies. This quarter we won the IMs. A best paper Award with P semi a marada fully owned company for our PCM phase change materials, switch technology achieving a 15% or on sea off figure of
Being a Forex Improvement versus state-of-the-art RSOI.
These switches are being prototyped for both low and high-frequency millimeter-wave applications.
And, importantly, this quarter we received a Best Supplier Award from a major Korean RF front-end module provider.
Looking at power management, the computational complexity of AI processors is increasing, leading to a corresponding rise in power requirements to meet this need, as shown on slide 6. We provide a variety of power management solutions with switch devices that have ultra-low resistance, advanced digital logic integration, and manufacturing options, with 300 mm lines in the US and Japan.
Lead customers are now designing to our high-efficiency power delivery solutions for this rapidly growing market.
We deliver best-in-class power transistor performance and continue to advance this offering, having released device optimization for higher switching frequencies this past quarter.
For sensors and displays.
We expect.
A revenue increase of about 20% in the second half of 2025, compared to the previous quarters and the previous year's run rate, primarily due to increases in the Machine Vision Market.
We have also begun substantial new activities with several customers, including a leading automotive imager provider and an OLED on Silicon supplier, the latter of which has prototypes already in test.
These new activities are expected to fuel additional future growth.
Looking at utilization.
In the second quarter, Fab 2 in Israel and Fab 9 in Texas both operated at about 60% utilization, while repurposing tools to now load high levels of silicon gadolinium and to begin the manufacture of silicon photonics.
Fab 5. Was it 75% with rising demand for high voltage power management?
and FAP 7 300 mm was fully utilized.
Well, exceeding, the 85% model.
In summary, our business continues to advance with significant progress across.
Key platforms.
We are well positioned for continued growth and success in our target markets.
We're successful executing a clear strategy that is translating into tangible financial results.
With expanding customer engagements and measurable operational progress.
We are committed to delivering sustainable and long-term value to our stakeholders. With that, I'd like to turn the call over to our CFO, Oren Shirazi.
Hello everyone.
Earlier today, we released our financial results for the second quarter of 2025.
For the second quarter of 2025, we reported revenue of $36,672 million, representing a $21 million or 6% year-over-year revenue increase compared to the second quarter of 2024, and a 14% quarter-over-quarter revenue increase compared to the previous quarter.
Gross profit and operating profit for the second quarter of 2025 were $80 million and $40 million, respectively.
Each is higher than the previous quarter by $7 million.
Net profit for the second quarter of 2025 was $47 million. This represents a $7 million increase quarter over quarter, equating to 42 cents basic and 41 cents diluted earnings per share.
Financing and other income net in Q2 was $14.4 million compared to $10.6 million.
This $3.8 million increase was mainly attributable to a gain recorded as a result of a zero cost cylinder transaction. We executed this to hedge future foreign currency risk.
In this respect, I would now like to describe our currency hedging activity.
In relation to the Japanese Yen, since the majority of TPS cause revenue is denominated in Yen and the vast majority of CPS could cost RNN, we have a natural hedge over most of our Japanese business and operations.
To mitigate part of the remaining yen exposure, we are executing zero-cost cylinder transactions to hedge the currency fluctuations.
Hence.
While the yen rate against the U.S. dollar may fluctuate, the impact on our margins is limited.
In relation to the Israeli shekel and Euro currency.
While we have no revenues in such currencies.
Since a portion of our cost in Israel is denominated in the Israeli currency and a portion of our cost in a graph, in Italy, is denominated in Europe. We also had a lot portion of such currencies Risk by engaging, zero cost, cylinder transactions to mitigate exposure. Resulting from our nest and Euro denominated cost.
Under gaap.
The fair value of such transactions is recorded in the P&L.
Which drove the previously stated financing and other income net increase.
Moving to a balance sheet and future capex and cash plans.
Our balance sheet remains very strong, as evidenced by the following indicators and financial ratios.
As of the end of June 2025, our assets total $3.2 million.
Primarily comprised of $1.4 billion in fixed assets, net.
Predominantly comprised of fed, machinery.
And $1.8 billion of current assets.
Current assets ratio is very strong at about 7x.
While shareholders' equity reached a record of $2.8 billion at the end of June 2025.
A strong financial position allows us to invest in strategic opportunities that support our corporate vision as follows.
We have committed to pay up to $300 million to acquire equipment and capex. In the 12 in New Mexico fed, 20% of which has already been paid.
While the remaining 80% are focused to be paid as we ramp up capacity and technology qualifications over the next two and a half years.
As part of our estimate for the partnership,
6.
In addition to our high-margin Cipher and 5G business, we announced plans to invest $350 million to expand our capacity in our 8-inch PS in Israel and Texas.
And in our 12-inch woven in Japan.
This capex includes a large portion of capability. Capex for advanced developments and high-end R&D, technology-related projects.
40% of this amount has been paid today, while the remaining 60% is expected to be paid by the end of 2026.
All of these investments, including the 5G and $5 billion for capex, are fully reflected in our previously presented strategic and financial model.
Under this model, we target $2.7 billion in annual revenue.
At full loading of our existing Feds, including a grant and New Mexico.
$560 million per annum of operating profits and $500 million per annum of net profits.
That concludes my prepared remarks. Now I'd like to turn the call back to the operator so we can take your questions. Thank you.
Thank you, ladies and gentlemen, we'll now begin the question and answer session as a reminder, if you wish to ask a question. Please press star 1. 1 on your telephone keypad and wait for a name to be announced. Please standby, will compile the Q&A queue? This will take a few moments if you wish to cancel your quest.
Press star 1 1 again.
And now we're going to take the first question.
And the question comes to Land of Kodi AI from Benchmark Company. Your line is open, please. Ask your question.
Hi. Thanks, guys.
Hey, guys. Hey, Russell. Hey, uh, congrats on a great quarter and, uh, a great year. It looks like it's shaping up so far. Um, uh, maybe if I could just start with, could you give a little more detail on, uh, what segments you expect to contribute, uh, and maybe rank order them for your sequential growth through the second half of the year?
Um,
So, first and foremost is infrastructure. As far as
Um, quarter-over-quarter deltas and absolute numbers.
So, the silicon geranium and the silicon photonics.
Um, we had stated at the year's onset.
That on CIPO we had circa $105 million in revenue in 2024, and we expected a doubling of that in 2025. Um, that's definitely within the second half targets that were given—maybe, you know, higher than a doubling.
So, that's a very important segment for us.
Um, and maybe, I don't know, in some summary comments. I might give a um,
Some more color on.
What the?
Capacity increases that we're doing there.
What that could result in is increases against what we're targeting in the fourth quarter of this year. But that's the biggest, um, our power management. We're expecting still strong contributions.
Um, I mentioned that in the imaging.
There was an over 20% increase.
In the run rate of 2024 and the first two quarters of 2025, in the second half, at least from what we target right now, um, from our customer forecast, and that mainly due to increased in Machine Vision.
So, uh, those are the areas of growth, but, uh, very important.
On a rebound, is the weakness that we had cited previously in RSOI for the front-end module from mobile. That has seen a nice increase from Q1 to Q2.
And, um, we're guiding for an even stronger increase in the third quarter. So, you know, the biggest again being infrastructure and RFS for mobile, power management continuing strong, and, uh, the CIS adding to it as well.
It sounds like a good strength to cross the board then Russell congrats um would you then say would you consider yourself now fully booked through the end of the year? Uh and if so do you uh do you have a any available capacity to support any near-term? Turns near-term turn turn turns business. Um that could provide any yet upside to your essence
um,
We had mentioned, uh, 60% utilization in Fab 2.
And in San Antonio, Fab 9.
We certainly have.
Room there for immediate upsides.
But the biggest portion of both of those fabs is focused on.
Um, utilizing the additional side G and CIPO capacity that we've built there.
um, which is
To an extent in our hands, to an extent.
Um, it rests on completion of customer qualifications. But that's within the numbers of the expectations that we have.
So, we see those utilizations increasing. However, as we're doing that, there is room to handle immediate upsides.
1 of the
Really, I think unique features of Tower.
Is that we have?
A very strong worldwide.
Manufacturing footprint where we're in, Japan.
We're in multiple sites: in the U.S., in Israel, and in Italy.
Um, and
By definition, we cross-qualify all of our flows.
so, as there's
There continue to be questions geopolitically, and people get concerned a little bit here or there about tariffs and the impacts of tariffs.
Um, we have the ability to move customer demands from one factory to another. One of the strong reasons for this is...
Um, moving silicon photonics and CIPO, um, both, and especially CIPO being very, very high margin value add products.
Um, firstly, to have added capacity, but secondly, to be able to serve customers depending on their needs of where to ship products from.
So, I think we've seen, uh, some.
Immediate-term business, especially in the Tonami Fab 5 in Japan, is in the power sector, and we're open to getting more. But fundamentally...
um,
Where we're focused at this point is meeting a very strong, consistently growing demand for the infrastructure: the CIPO and the SAJI. Hopefully, that answered your question, Cody.
It does, Russell. Thank you very much, and congratulations on the progress. Thank you.
Thank you.
Now, we're going to take our next question.
And the question comes from the line of Richard Shannon from Craig Hallum Capital Group. Your line is open, please ask a question.
Hey, Richard.
Hi, Russell. How are you? Congratulations on some nice numbers again.
I'm doing good, but it depends on your question.
Um,
well, let's see here. I think I'm going to ask 1 on uh silicon vitonics. You made an interesting um, comment about in the past supporting, um, transmit functions and now supporting uh, or prototyping. I think you said for for some stuff on the receive side, so I'd love a little bit, love to understand a little bit more about that, but also maybe just kind of look at the bigger picture, here about what you're expecting in terms of content. Both the maximum amount as well as kind of expected growth in content, over the next couple of years until the tonics, please.
um,
so, for the specific receive function that we're doing now,
We think, and it's for a specific application. I don't want to get into the details here because some of...
the really, it's not just
That we're doing with the customer. But, um, sometimes speaking too much can give other people hints as to what you're doing and why.
But it's a specific application of the receive function.
that we've been able to very, very
Innovatively address with CIPO, um, and a, an extremely high performance, cost-effective way. We think that it would add about, um, 20% to our served market.
Um, plus minus for this specific application and receive.
As far as the demand that we're seeing.
uh, in
Talking about our growth, which we have mentioned many times, in the fourth quarter, we would expect very high amounts of silicon photonic shipments.
uh, we're probably
seeing from,
Our Q4.
Shipment level in cipo.
By customer demand, at the end of Q2 2025, a doubling of demand requires a doubling of what we would have to be supplying in capacity.
Okay, fair enough. That's one way to look at it. I appreciate those comments. My follow-on question, Russell, is in the RF mobile space here. Um...
I guess the way I'd like to think about this is to what degree are we seeing this improvement? Both in the second quarter and I think you're talking about the, you know, third quarter at least or potentially second half here about this improvement here. To what degree is this, cyclical, like inventory replenishment and/or share gains here? And to what degree does that play into your comment from last quarter about seeing some strong growth in our mobile in both 2026 and 2027? Thank you.
um,
I, I don't see.
The 20% growth that we had in Q2 over Q1.
And the 30% that we were targeting in Q3 over Q2. Um, cyclicality. It's hard to speak about cyclicality, but certainly it's related to inventories having been consumed that...
Had been a function of the very strong 2024.
Um, we also have multiple customers that themselves are growing their market share.
And so, you know, that's one way that one can.
Um, always outdo a market trend is by.
Um, serving customers that they themselves are growing, their market share against others that you might not be serving.
So, the Q3 and Q4 numbers that we're looking at, I think that they're just very basic share gains that we have in our customers.
Some of what we would be expecting in the latter half of Q3 and Q4 deals with.
An existing customer that we've had for a long time that has just recently increased their forecasts um and their their pose. Um, what is driven that I, I honestly don't know. At the moment, they're posed that have come in just recently,
Okay, thank you. Russell.
Thank you.
Now, we're going to take our next question.
And the question comes to line of me, Husseini from Susana Financial Group. Your line is open. Please ask a question.
Thanks for taking my question. I have two. First of all, for Russell, I want a better understanding of the big picture, especially when it comes to data center infrastructure. We are migrating from copper to pluggable and, at some point, migrating to...
Go package update. And what what I want to better understand Russell, is, how do you see your customers evolving? And in that context? How are you actually planning for capacity? Uh, in in a sense that to avoid double? Um, in a sense to avoid, too much capacity come on online because, uh, there's also a convergence, uh, among your customers. So the transition in technology from copper to pluggable and eventually to um, core package and how uh the mix of customers evolving and how that impacts Your Capacity planning and I have a follow-up.
I fully understand. I think that pluggables have been the mainstay for multiple years. I don't see it being in any competition with copper.
So pluggables have been the main stay. They're maintaining the main stay. The the major thing for cipo is the movement from an EML Solution. That's been the Mainstay solution to a cipo solution.
Um, so that's the difference there. I don't really follow the copper statement.
But, um, certainly a lead customer that we have at $1.6 trillion.
Um, has decided to do everything with CIPO versus ML.
because of,
2 functions of the CIPO.
Um, 1 being cost, which, you know, the, um,
Ability to not have to do.
Separate Indian phosphide.
Um, modulator laser. With a very, very complicated process and very expensive to have the.
Integration of all the passes.
Um, so it has a strong cost benefit, but they also noted a very strong performance benefit at 1.6. And that's because of integrating everything onto the pick.
Um, I would and I, I had said that in the script, we see this, um, 1.6t where there's both a cost and apparently a performance benefit, as being a big drop. That will converge more into cipo from EML. Um, presently, what is the percentage of cipo versus CML? I, I couldn't tell you exactly what that is. I know that our demand for cipo is strong and continues to grow and to grow very strongly. And at the 1.6t, it's it's, you know, it seems to be even stronger while it doesn't just seem it is as we move to 3.2 t.
um, stated we
We are working with lead customers on producing the capabilities there, which.
Requires.
Um, to do a 400.
Gigabit per second, modulator it requires.
A different materials and we're very Advanced on that pursuing 2 different material types. Um so I I see the the pluggables staying very strong for a good period of time.
Uh, there are those in the industry that question if CPO will ever really come into the market. I'm not saying it won't. We have our own strategy for CPO, and I think we're pursuing it fairly well. But, um, CPO.
Um, if it comes in, should it come in probably not until 2930?
Um, everything we do with Sy and everything we do with Cipo will still be in demand. So, I don't see it being something that would discount that.
Great, and thank you for clarifying. My question is actually a follow-up to it. I want to understand how integrating the modulator into your process technology is perhaps helping you with incremental revenue per wafer. Is that how we should think about it?
Um, for CYO, the modulator is always part of the pick.
Um, so we're going from
uh, using
Our capabilities for the photodetector and the modulator, where we have strong capabilities in germanium and silicon, obviously allow us to be able to provide that.
As part of the pick, and that is one of the benefits of silicon photonics itself, that's one of the big drivers of it.
Um, otherwise you're doing things in indium phosphide outside, and as I stated, um, previously, the process to make the indium phosphide modulator, in addition to the laser, is a very complicated process because it's different layering for both that are done together. So it's, um,
Many photo steps, passing steps, and growth.
If that answers your question, I'm not sure. Yes, absolutely. Actually, I want to highlight, I want to make sure I understand the indium phosphide alternative that one or two of your competitors are highlighting.
Um, has it caused this disadvantage? And your solution is more cost-effective.
Right. Yes, I believe so. Um, but most of our customers still use an EML solution, right? It's a question of that. They also turning to CIPO for certain.
Um, speeds, and it appears that the CIPO adoption is only growing at $1.6 trillion, and I believe it will be stronger beyond that.
Okay, great. I'll go back into the queue.
Thank you.
Now, we'll go and take a last question for today.
And it comes to the line of please. The Thompson from Zach Investment Research. Your line is open; please ask a question.
Hi. Uh, thank you for taking this.
Uh, I'm looking at the numbers and it really seems like our mobile has come roaring back. Do you think between RF mobile and RF infrastructure?
Um, they're both going to come in pretty much the same for the year, or can mobile even beat the?
um,
let me take a look.
uh,
Products that were serving that both serve it, right? It's the side G for drivers and toss.
And in some cases sold for cdrs and it's the cipher for the pick. So we're it's 2. Different products that are both needed and for the RF um SOI which is and we're also doing some just plain RFC Moss for controllers, but the bulk of it is, RF SOI. So, um, now the, um, the infrastructure is is bigger but the the mobile numbers. If we look at
Um, Q3 and Q4, they're very high run rates, similar to past years.
Well, that's great. Now, if you had to describe why it's come back so much, is it just specific customers, or is it the market?
Um, I think a combination of both. As stated, we have customers that they themselves are going after market share.
against um,
Their competitors, which in some cases we do not serve.
So, that's a, you know, that's always a big thing when you're increasing your share of market.
I stated it at the beginning of the year. We had seen, I think not just us, but many people saw a pullback in Mobile for the fact that 2024 had been a very big growth year in Mobile.
Um, nobody wants to short ship their end customer.
For the fear of losing SKUs.
So, they build up.
More inventory than is needed. Um, not knowing when there would be a glut, so to speak. And that's how you have, you know, inventory corrections. So, at the beginning of the year, certainly sort of an inventory correction, um, from everything we're seeing. Now, it appears that most of that inventory has been eaten up.
Okay, thank you. All right, one question for you. I mean you.
on other income.
You keep saying that the number is going to fluctuate, but yet it's steadily increased for the last few quarters.
You know, a year and a half. Should we expect it to continue to increase?
No, I think, uh, we had a good gain here. Like I mentioned in my prepared remarks, uh, that caused the majority of the $3.8 million increase.
Uh, which is good in financing. Uh, another income net.
Uh, from the 4 from the 10.6 we presented last quarter to 14.4 this quarter. I think the
The number we should expect in the future is the same as the baseline of 10.6%.
From movement in, uh, this quarter. But I cannot predict, uh, the future, so I would use the same baseline which includes.
Uh, all the numbers, uh, without any exceptional items or one-time, 10.6.
Okay, great. Thank you so much. That's all my questions.
Thank you.
Now, we're going to take our next question.
And the question comes from Richard Shannon from Craig-Hallum Capital Group. Your line is open. Please ask a question.
Great. Thanks for letting me ask you a couple following questions here. Um, Russell 1 for you here. Um, back in the third quarter, call of 23, you set set out this framework from a revenue and and margin or profitability perspective, uh, I guess you have 2 questions for this. Um, how do you think your tracking so far to almost 2 years into this? In terms of the of the margin profiles, you're both at the gross and ebit line here. And then I maybe I'll try to stretch you here and see if you'll respond in any way here. But how do you think about a time frame for hitting this Revenue goal? Any any thoughts you would give us?
Um, you're referring to the model of the $2.7 billion.
That's correct.
Um,
On a margin perspective, I think we're probably outperforming.
Um, from everything that we're doing.
On. Um,
A timeline to the $2.7 billion.
Uh,
You know, candidly, we are always looking at somewhere 2829 to be there and.
I think that's still what our targets are.
Great. That's all for me.
Okay, so depreciation actually you can see that in one of the tables that we attached to the press release, there is a line which is attached to the cash flow called depreciation and amortization, which includes a few amortization items. But the amount listed there of about $65 million to $70 million a quarter, we expect those levels to remain pretty much the same, maybe a slight increase. Because, like you mentioned, the incremental capex, on the one hand, is increasing depreciation. On the other hand, there is depreciation that goes out of the books because of investments that were made in the past.
Your point is valid that, uh, CAPEX currently is higher than in the past.
So, depreciation should go up slightly. But it's, uh, most of that is fixed cost and, uh,
I don't believe it should go more than the $7075 million sales quarter that we present.
As far as free cash flow, yes, in the last few quarters we see the same picture that the cash from operations, which is very good, is a similar number to the CapEx.
and this is because of the total of $1.15 billion in carpet that we announced.
Uh, the $500 million a great is $300 million 11x and $350 million. 545 G Capek.
so this 1 15
I refer to that, you know, I prepared remarks supposed to be still paid in the coming 22 and a half years.
About more than $500 million of that was not paid yet. So this is
This will be part of the CapEx in.
At the rest of 25 and surely 26, and some of that in 27. So I would expect the capex total level per quarter to remain like now, maybe slightly go up.
uh,
So to be between 100 to 120 a quarter.
Which is like now.
Uh, however, the cache operation is supposed to continue its positive trend and improve as we, uh, go up on the revenue, which Russell mentioned, the mid-range guidance, which is...
395 and the targets for Q4 or even higher. So obviously, cash from operations will be higher when capex is supposed to remain at those levels that already reflect the new plans of $1.15 billion.
Okay, great. Thanks for all that detail. Um, that's all for me.
Thank you.
Now, we're going to take our last question for today.
And it comes to land of me from Susana Financial Group. Your line is open; please ask your question.
Yes to follow-ups. Um, on Opex, should they assume that Opex in ’25 is up on a year-over-year basis?
Is it is it a fair assumption and I have a follow?
Yes, yes, uh, we consider that fixed cost and, uh, Opex should remain flat at the current rate of about $40 million per quarter.
And then, um, going back to the previous question regarding cash flow, you actually done a good job of.
Funding the capex and actually um, maintaining um, uh, a stable, net cash per share. Um, is there any plans for the cash or should I just assumed that you would, uh, rather be conservative and just accumulate the cash Beyond um funding the capacity? Any any additional thoughts? You can share with us?
Yeah, like you mentioned, uh, the destination that we believe for our cash is for capital growth, which is why we approved in the last few years the $1.15 billion capex.
For the intercept for the graph, and for the 5.6, its total of $115.
And, uh, we believe that the best returns for the shareholders come when we invest in capex and see the revenue growing, like Russell described.
Its amazing growth this year.
Uh, a quarter of a quarter. And, uh, that's the purpose that we...
plan for our cash.
Okay, thank you.
Thank you.
Thank you.
Thank you.
Um,
Really, to everyone on the call.
Um, thank you for your interest in the company.
Thank you for the good questions that were asked.
Uh, we did deliver a good second quarter. We guide a strong third quarter with a target of an even stronger, best ever revenue for the fourth quarter.
Um, I spoke at some length, and there were some questions about increases in our silicon germanium and silicon photonics capacity.
um,
The third and fourth quarters are expected to begin to see the benefits of these activities.
But I wanted to kind of frame.
What can be expected as all of this capacity that's coming online is qualified and shipped?
The end-state capacity, which should be realized in the second half of 2026.
There will be a capacity that is 33% higher in Silicon Geranium.
And 2.2 times larger in silicon photonics.
Than the fourth quarter, 25 targeted shipments.
which,
Total revenue is targeted to exceed $435 million.
I'm very importantly tracking these increases in capacity well with our customers' forecasted demands.
So it's, um, I think for us a very strong story.
We believe that the markets that we chose to work in,
We are and continue to be in the right markets.
Our models, I think, are strong.
and the, um,
Incremental Revenue.
To margin net profit, ratios are good, and we'll continue to grow.
So, I thank everybody for their interest in the company.
It's been.
Extremely exciting. There's multiple.
Activities that were involved in.
In the next.
Quarters. I wanted to just mention some of them and, um, in the short term we would hope to see you at some of these conferences.
We're excited to host our 2025 technical goals and Symposium in China this September, and in the U.S. in November.
um, TGs
This Global Symposium is our flagship technology event.
Bringing together customers and ecosystem partners.
Serving as a critical platform for showcasing our specialty analog platforms.
From CIPO, SAIIC, RFC Moss to power management and imaging.
While aligning on future road maps.
And enabling stronger co-development Partnerships.
We'll be participating in the following conferences.
And I truly look forward to meeting and engaging with all of you at these events.
On August 20th, I will attend the 6th Annual Need, um, Virtual Semiconductor, Semi Cap 1-on-1 Conference.
August 26th, we'll participate in the Jeffrey Semi IT Hardware Comms Technology Conference in Chicago.
On August 27th, we'll attend the 2025 Evercore ISI Semiconductor, IT, Hardware and Networking Conference in Chicago.
On September 3rd, we'll participate in The Benchmark 2025 Tech Media Telecom Conference in New York, and on September 10th, we will attend the Jeffrey's Tech Track 2025 Conference in Israel.
Again, we very much appreciate your interest in our company.
I look forward to providing you with updates on our progress towards achieving our long-term goals in the coming quarters.
And in the very short term, updating our achievements in Q3 and Q4. Thank you very, very much.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.