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TSEM: A Week Long Cyberevent Disruption Reduces Production in Q3

09/11/2020

By Lisa Thompson

NASDAQ:TSEM

READ THE FULL TSEM RESEARCH REPORT

The current disruption in production being experienced by Tower Semiconductor (NASDAQ:TSEM) is expected to reduce revenues in Q3. With all of its fabs outside of Japan offline for a week, we expect that revenues maybe reduced upwards of $13 million in the quarter. Even with a reduction of this magnitude, it would still put the company’s Q3 revenues within its guidance range, the low end of which is $304 million. As a result, we are reducing our Q3 revenue estimate down to $309 million and adding $2 million in one-time expenses associated with combatting the cyber intrusion as well as shutting down and bringing the fabs back online. This revision takes the GAAP EPS down to $0.10 from $0.18 and non-GAAP to $0.16 from $0.22. The full year is now $0.63 per share GAAP and $0.79 per share non-GAAP, assuming the one-time expenses are called out as such and taken out in the adjusted numbers as we think they should.

In future quarters, we may see some payments by insurance for both business interruption and expenses, but we do not expect to see anything in Q3 or Q4, as it will take a while to sort out.

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