Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 60

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 60
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 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, and the return
on these investments may be lower than we expect and these investments may significantly reduce our net profit and cash balance, and require
us to raise additional funds by way of debt or equity offerings. In addition, as we invest in expanding our operations into new areas
globally, our business and results will become further subject to the risks and challenges of operations in those locations, including
potentially higher fixed costs and operating expenses, the potential impact of legal and regulatory developments, and high depreciation
of fixed assets, all of which may reduce our profitability.

New Accounting Pronouncements

For recently issued accounting pronouncements, see Note 2X and
Note 2Y to our annual financial statements included herein.

RESULTS OF OPERATIONS

For a discussion of our results of operations for the year ended
December 31, 2022, including a year-to-year comparison between 2023 and 2022, refer to Item 5. “ Operating and Financial Review and
Prospects” in our Annual Report on Form 20-F for