Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 59

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 59
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 performance of their next-generation products has enabled us to maintain a high customer retention rate, while increasing the number
of new customers and products.

We continuously aim to expand our capacity footprint and business
by addressing the future needs of our existing customers and attracting new customers that will utilize our existing facilities, some
of which have recently undergone further capacity expansion projects. Additionally, we seek to acquire external capacity through acquisitions
of existing fabs or establishing new fabs, as we have done in the past, independently or through third-party collaborations, utilizing
existing resources or additional funding (which may include cash, equity or in-kind investment). We also offer a wide range of support
services for the establishment of new facilities or the ramp-up of existing facilities owned by third parties, using our technological,
operational and integration expertise, for which we receive payments based on the achievement of pre-defined milestones and may also be
entitled to certain capacity allocation and other rights.

Design wins with new and existing customers.

We work with our customers and potential customers to understand
their product roadmaps and strategies. We consider design wins to be critical to our future success. We define a design win as the successful
completion of the evaluation stage, where a customer has verified that our platform process meets its requirements and qualified our libraries
and IPs for their products. The revenue generated from each design win can vary significantly. Our long-term sales expectations are based
on forecasts from customers, internal estimates of customer demand, factoring in expected time to market for end-customer products incorporating
our products and associated revenue potential, and internal estimates of overall demand based on historical trends.

Selling prices and operating costs.

Our gross and operating margin is influenced by various factors,
including the market demand for semiconductor wafers, pricing changes, shipment volumes, new product introductions, changes in product
mixes, changes in the purchase price of raw materials, including silicon starting material wafers and yields. In general, newly introduced
products and products with higher performance and more features tend to be priced higher than older, more mature products. Average selling
prices in the semiconductor industry typically decline as products mature. Consistent with this historical trend, we expect that the average
selling prices of our products will decline as they mature. In the normal course of business, we will seek to offset the effect of declining
average selling prices on existing products by reducing operating costs and introducing new and higher value-add products. Newly introduced
fabs are increasing our operating costs while selling price and manufacturing volume may not be