Tower Semiconductor (TSEM) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 revenue of $460M, up 24% year-over-year, with net profit of $91M and gross profit of $138M, reflecting strong sequential and annual growth.

• Q3 2026 revenue guidance is $520M (+/- 5%), representing 13% sequential and 31% year-over-year growth.

• Updated 2028 model targets $3.6B revenue, $1.2B net profit (33% margin), and $1.63B gross profit (45% margin), assuming 85% fab utilization and enhanced product mix.

• Strong growth driven by customer demand, strategic partnerships, and operational execution, with significant expansion in silicon photonics and RF infrastructure.

• Management remains committed to delivering quarter-over-quarter revenue growth throughout 2026.

Financial highlights

• Q2 2026 revenue grew to $460M (+24% YoY), gross profit reached $138M (30% margin, +72% YoY), and net profit was $91M (20% margin, +95% YoY).

• EPS was $0.80 basic and $0.79 diluted; adjusted net profit for Q2 2026 was $100.7M, with adjusted EPS of $0.89 basic.

• H1 2026 revenue totaled $873.7M, up from $730.2M in H1 2025; net profit attributable to the company was $155.8M, up from $86.7M.

• Free cash flow for Q2 2026 was negative due to high capital investments, despite strong operating cash flow of $177M.

Outlook and guidance

• Q3 2026 revenue guidance mid-point is $520M, annualized run rate above $2B.

• 2028 model targets $3.6B revenue, 45% gross margin, 38% operating margin, and 33% net margin.

• Margin expansion expected to continue, driven by product mix and operational leverage.

• Targeting $1B annual run rate for silicon photonics segment in Q4 2026.