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Introduction
 

Tower Semiconductor Ltd. (TSEM), headquartered in Migdal Haemek, Israel, is one of 4 constituents in our Pure-Play Semiconductor Foundries Portfolio (see below) and its stock surged in price last week due to a confluence of strong financial performance, bullish analyst sentiment, and exciting product innovation.

Catalysts For Major Increase
 

Here's what drove the momentum:

1. Strong Q2 Earnings: 
   • Revenue was up 6% vs. Q1; EPS was up 17%, net profit rose and Q3 guidance called for a 6.2% increase in revenue, all of which reflected effective cost management, operational efficiency, and continued growth with CEO Russell Ellwanger highlighting momentum in RF infrastructure, driven by data centers and AI expansion
2. Breakthrough AI Imaging Chip:
   • Unveiled the Cheetah HS, the world’s first AI-in-imager chip capable of capturing up to 260,000 frames per second, to  target high-speed applications in inspection, robotics, and sports, significantly reducing system power and cost and  boosting  investor confidence in Tower’s tech leadership.
3. Analyst Rating/Price Target:
   • Analysts have a consensus rating of "Strong Buy" and an average price target which forecasts a 16.9% increase in the stock price over the next year. (Source)

Our Pure-Play Semiconductor Foundries Portfolio
 

The Portfolio consists of just 4 constituents that focus exclusively on fabricating semiconductors (aka chips or wafers) but their business models and strategic focuses differ considerably from each other:

• Tower, with a market capitalization of just $5B, is a specialty analog foundry that focuses on analog and mixed-signal ICs: RF, power management, CMOS image sensors, and MEMS and serves niche markets like automotive, medical, industrial, and aerospace. 
• Taiwan Semiconductor Manufacturing Company (TSM), with a market capitalization of $963B, fabricates advanced logic chip manufacturing (3nm, 5nm, 7nm nodes).
• United Microelectronics Corporation (UMC), with a market capitalization of $19B, is a mature node specialist focusing on older, cost-effective nodes (28nm and above) and is strong in automotive, industrial, and consumer electronics.
• GlobalFoundries (GFS), with a market capitalization of $21B, fabricates  both mature and specialized nodes (12nm, 22FDX, etc.) and has a strong presence in the RF, IoT, automotive, and defense sectors.

As you can see, each of the above companies plays a distinct role in the semiconductor ecosystem. 

Below are how the constituents in the Portfolio performed last week, in descending order, and YTD:

1. Tower Semiconductor (TSEM): UP 16.8% w/e August 22nd; UP 6.3% YTD  
2. GlobalFoundries (GFS): UP 4.3% w/e August 22nd; UP 19.6% YTD
3. United Microelectronics (UMC): DOWN 1.6% w/e August 22nd; UP 4.3% YTD
4. Taiwan Semiconductor (TSM): DOWN 2.5% w/e August 22nd; UP 18.0% YTD

The portfolio was UP 1.0% w/e August 22nd and is now UP 10.2% YTD.

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