JERUSALEM (Reuters) - Tower Semiconductor reported on Wednesday a slightly lower than expected rise in first-quarter profit, sending its shares sharply lower, but forecast revenue above estimates for the second quarter.
The Israeli chipmaker, which used to be called TowerJazz, earned diluted earnings per share of 26 cents in the first quarter, up from 16 cents a year earlier. Revenue rose 16% to $347 million, with organic growth up 21%.
Tower was forecast to earn EPS of 27 cents on revenue of $345.2 million, according to I/B/E/S data from Refinitiv.
Tower's Nasdaq-listed shares were down 9% at $25.10 in morning trading.
It expects second-quarter revenue in a range of 5% above or below $360 million for year over year growth of 16%. Analysts are forecasting $351 million in revenue.
Tower in February said it planned to invest an extra $150 million to boost production as it forecast record revenues this year amid growing demand.
Tower, which specialises in analogue chips used in cars, medical sensors and power management, said it would invest in equipment at its manufacturing sites in Israel, Texas and Japan to boost capacity for 200 and 300 millimetre chips.
It said it has issued purchase orders of $150 million in order to increase its wafer capacity. "This equipment will begin to provide incremental capacity during the second half of
2021, targeted to be fully qualified during the first quarter of 2022," Tower said.
Chipmakers are seeing a surge in demand as economies recover more quickly than expected from the pandemic, with some sectors, such as automaking, reporting shortages.