Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 13

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 13
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’s specific purchase order, on occasion, we may start processing wafers in excess of a customer’s orders
based on forecasted customer demand, because we may forecast future excess demand or because of future capacity constraints. If such wafers
will eventually not be covered by matching customer purchase orders, we may be left with excess inventory that may ultimately become obsolete
and must be scrapped or sold at a significant discount. Significant amounts of obsolete inventory may have a negative impact on our financial
results.

Our sales cycles are typically long, and orders
ultimately received may not meet our expectations, which may adversely affect our operating results.

Our sales cycles, which we measure from first contact with a customer
to first shipment of wafers ordered, vary substantially, and may last longer than two years, particularly for new technologies. In addition,
even after we make initial shipments of prototypes, it may take several more months to reach the targeted maximum quantities. As a result
of these long sales cycles, we may be required to invest substantial time and incur significant expenses before receiving any purchase
orders and related revenue. If orders ultimately received are significantly lower than our expectations, we will have excess capacity
that we may not be able to fill within a short period of time, resulting in lower utilization of our facilities. In addition to the revenue
loss, we may be unable to adjust our costs in a timely manner to align with the lower revenue, since a large portion of our cost is fixed
cost, which remains constant irrespective of the number of wafers, which may adversely affect our operating results and financial condition.

If we are unable to purchase equipment and/or
raw materials and other supplies, or there are delays in the delivery thereof, we may face delays or a temporary halt in operations or
other problems. If we must purchase raw materials beyond our needs as required under committed vendor contracts, we may need to amortize
or write such purchases off, which may adversely impact our financial results.

In periods of high market demand, the lead times from order to
delivery of equipment could be as long as 12 to 18 months. We also procure used equipment, which can take a long time to qualify, potentially
causing delays in our operations. There may be delays in the delivery of equipment and/or raw materials and other supplies to us, which
in turn may harm our capacity increase plans and/or utilization, qualification and cause delays or a halt in operations. In addition,
our processes use many raw materials, including silicon w