Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology, development, and process platforms for its customers in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiPho, SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor owns one operating facility in Israel (200mm), two in the U.S. (200mm), and two in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo, shares a 300mm facility in Agrate, Italy with STMicroelectronics, as well as has access to a 300mm capacity corridor in Intel’s New Mexico factory. For more information, please visit: www.towersemi.com.

Forward-Looking Statements

This release, as well as other statements and reports filed, stated and published in relation to this quarter’s results, include certain “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, projections and statements with respect to our future business, financial performance and activities. The use of words such as “projects”, “expects”, “may”, “targets”, “plans”, “intends”, “committed to”, “tracking”, or words of similar import, identifies a statement as “forward-looking.” Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements, which describe information known to us only as of the date of this release. Factors that could cause actual results to differ materially from those projected or implied by such forward-looking statements include, without limitation, risks and uncertainties associated with: (i) demand in our customers’ end markets, (ii) reliance on acquisitions and/or gaining additional capacity for growth, (iii) difficulties in achieving acceptable operational metrics and indices as a result of operational, technological or process-related problems, (iv) identifying and negotiating with third-party buyers for the sale of any excess and/or unused equipment, inventory and/or other assets, (v) maintaining current key customers and attracting new key customers, (vi) over demand for our foundry services resulting in high utilization and its effect on cycle time, yield and on schedule delivery, as well as customers potentially being placed on allocation, which may cause customers to transfer their business to other vendors, (vii) financial results may fluctuate from quarter to quarter, (viii) our debt and other liabilities may impact our financial position and operations, (ix) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (x) fluctuations in cash flow, (xi) our ability to satisfy the covenants stipulated in our agreements with our debt holders, (xii) pending litigation, (xiii) meeting the conditions set in approval certificates and other regulations under which we received grants and/or royalties and/or any type of funding from the Israeli, US and/or Japan governmental agencies, (xiv) receipt of orders that are lower than the customer purchase commitments or forecast and/or failure to receive customer orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) the effects of global recession, credit crisis and/or unfavorable macro-economic conditions, such as the imposition of regulatory requirements, tariffs, import and export restrictions and other trade barriers and restrictions, including the timing and availability of export licenses and permits, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles which may cause financial results to fluctuate from quarter to quarter, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we create inventory before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) financing capacity acquisition related transactions, strategic and/or other growth or M&A opportunities, including funding Agrate fab’s significant 300mm capacity investments and acquisition or funding of equipment and other fixed assets associated with the capacity corridor transaction with Intel as announced in September 2023, in addition to other capacity and capability expansion plans, such as announced for SiPho and SiGe, and the possible unavailability of such financing and/or the availability of such financing on unfavorable terms, (xxi) operating our facilities at sufficient utilization rates necessary to generate and maintain positive and sustainable gross, operating and net profit, (xxii) the purchase of equipment and/or raw material (including purchases under committed contracts), the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) product returns and defective products, (xxiv) our ability to maintain and develop our technology processes and services to keep pace with new technology, including artificial intelligence, evolving standards, changing customer and end-user requirements, new product introductions and short product life cycles, (xxv) competing effectively, (xxvi) the use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers, (xxvii) our dependence on intellectual property rights of others, our ability to operate our business without infringing others’ intellectual property rights and our ability to enforce our intellectual property against infringement, (xxviii) the Fab 3 landlord’s alleged claims regarding noise abatement and request for judicial declaration of material non-curable breach of the lease that may entitle the landlord to terminate the lease and/or may result in additional contingencies,  as well as uncertainties associated with the ability to extend such lease or acquire the real estate and/or agree on extension terms with the landlord and/or obtain the required local, state and/or other approvals required to be able to continue operations beyond the current lease term, (xxix) retention of key employees and recruitment and retention of skilled qualified personnel, (xxx) exposure to inflation, currency rates (mainly the Israeli Shekel, the Japanese Yen and the Euro) and interest rate fluctuations and risks associated with doing business locally and internationally, as well as fluctuations in the market price of our traded securities, (xxxi) meeting regulatory requirements worldwide, including export, environmental and governmental regulations, as well as risks related to international operations, (xxxii) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, including risks and uncertainties associated with the Agrate fab and the capacity corridor transaction with Intel as announced in September 2023, such as their qualification schedule, technology, equipment and process qualification, facility operational ramp-up, customer engagements, cost structure, required investments and other terms, which may require additional funding to cover significant capacity investment needs and other payments, the availability of which cannot be assured on favorable terms, if at all, (xxxiii) potential liabilities, cost and other impact due to reorganization and consolidation of fabrication facilities, or cessation of operations, including with regard to our 6 inch facility, (xxxiv) potential security, cyber and privacy breaches, (xxxv) workforce that is not unionized which may become unionized, and/or workforce that is unionized and may take action such as strikes that may create increased cost and operational risks, (xxxvi) the issuance of ordinary shares as a result of exercise and/or vesting of any of our employee equity, as well as any sale of shares by any of our shareholders, or any market expectation thereof, as well as the issuance of additional employee stock options and/or restricted stock units, or any market expectation thereof, which may depress the market value of the Company and the price of the Company’s ordinary shares, and in addition may impair our ability to raise future capital, and (xxxvii) climate change, business interruptions due to floods, fires, pandemics, earthquakes and other natural disasters, the security situation in Israel, global trade “war” and the current war in Israel, including the potential inability to continue uninterrupted operations of the Israeli fab, impact on global supply chain to and from the Israeli fab, power interruptions, chemicals or other leaks or damages as a result of the war, absence of workforce due to military service as well as risk that certain countries will restrict doing business with Israeli companies, including imposing restrictions due to hostilities in Israel or political instability in the region that may continue or exacerbate, and other events beyond our control. With respect to the current war in Israel, due to instability in neighboring states, Israel could be subject to additional political, economic, and military confines, and our Israeli facility’s operations could be materially adversely affected. Any current or future hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could have a material adverse effect on our business, financial condition and results of operations.

		Six months ended
		June 30,
		2025				2024
REVENUES		$	730,231			$	678,419
COST OF REVENUES			577,034				518,891
GROSS PROFIT			153,197				159,528
OPERATING COSTS AND EXPENSES:
Research and development			39,590				38,945
Marketing, general and administrative			40,844				37,720
Restructuring income, net*			--				(6,270	)
			80,434				70,395
OPERATING PROFIT			72,763				89,133
FINANCING AND OTHER INCOME , NET			24,985				11,694
PROFIT BEFORE INCOME TAX			97,748				100,827
INCOME TAX EXPENSE, NET			(12,439	)			(1,030	)
NET PROFIT			85,309				99,797
Net loss (profit) attributable to non-controlling interest			1,384				(1,718	)
NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	86,693			$	98,079
BASIC EARNINGS PER SHARE		$	0.78			$	0.88
Weighted average number of shares			111,693				110,938
DILUTED EARNINGS PER SHARE		$	0.77			$	0.88
Weighted average number of shares			113,218				111,964

* Restructuring income, net resulted from the previously disclosed reorganization and restructure of our Japan operations.

RECONCILIATION FROM GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY TO ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY:

GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	86,693			$	98,079
Stock based compensation and amortization   of acquired intangible assets			20,930				15,438
Restructuring income, net **			--				(2,634	)
ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY		$	107,623			$	110,883
ADJUSTED EARNINGS PER SHARE:
Basic		$	0.96			$	1.00
Diluted		$	0.95			$	0.99

** Restructuring income, net resulted from the previously disclosed reorganization and restructure of our Japan operations, net of tax.

		Three months ended								Six months ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
CASH FLOWS - OPERATING ACTIVITIES
Net profit for the period		$	45,592			$	56,750			$	85,309			$	99,797
Adjustments to reconcile net profit for the period
to net cash provided by operating activities:
Income and expense items not involving cash flows:
Depreciation and amortization *			74,636				65,567				148,864				125,111
Other expense, net			3,559				--				4,117				5,993
Changes in assets and liabilities:
Trade accounts receivable			4,972				(6,602	)			(1,382	)			(13,091	)
Other current assets			(5,002	)			3,141				620				(10,313	)
Inventories			(7,745	)			17,744				(11,873	)			(5,959	)
Trade accounts payable			8,218				(19,741	)			(2,896	)			12,818
Deferred revenues and customers' advances			(7,297	)			(2,091	)			(11,729	)			(4,022	)
Other current liabilities			5,580				274				9,298				17,142
Other long-term liabilities			86				(1,957	)			(3,807	)			(4,353	)
Net cash provided by operating activities			122,599				113,085				216,521				223,123
CASH FLOWS - INVESTING ACTIVITIES
Investments in property and equipment, net			(110,682	)			(112,615	)			(222,093	)			(210,633	)
Proceeds from (investments in) deposits, marketable securities and other assets, net			(28,000	)			17,443				16,470				16,330
Net cash used in investing activities			(138,682	)			(95,172	)			(205,623	)			(194,303	)
CASH FLOWS - FINANCING ACTIVITIES
Debt received (repaid), net			5,104				(10,439	)			(21,770	)			(18,848	)
Net cash provided by (used in) financing activities			5,104				(10,439	)			(21,770	)			(18,848	)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE			1,454				(2,658	)			4,271				(5,323	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(9,525	)			4,816				(6,601	)			4,649
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			274,818				260,497				271,894				260,664
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	265,293			$	265,313			$	265,293			$	265,313