Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 159

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 5
Chunk 159
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 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 sufficient to cover them entirely.
If we are unable to maintain overall average selling prices or offset any declines in average selling prices with realized savings on
our operating costs, our gross margin will decline.

39

Investment in capacity growth.

We have invested, and intend to continue to invest, in expanding
our capacity, developing products to support our growth and expanding our infrastructure. For example, in 2021 we entered into an agreement
with ST to share 300mm clean room space in Italy, for which we purchased a significant amount of equipment tools. In September 2023, we
entered into an agreement with Intel under which Tower will have access to a 300mm capacity corridor at Intel’s facility in New
Mexico, U. S. In accordance with the agreement, Tower is investing up to $300 million in equipment and other assets to be owned by
Tower and installed and qualified for Tower processes at Intel’s facility. We continue to explore additional capacity opportunities
and investments, which may require us to use a significant portion of our cash. We may want and/or need to raise additional funds for
these investments by way of debt and/or equity offerings, which funds may not be available on reasonable terms, if at all, due to unfavorable
capital market conditions, and may require consents that we may not be able to obtain. We plan to continue to invest in our capacity expansion
initiatives and existing and new operational capabilities throughout the world through significant capital expenditure