According to the Jerusalem Post, Tower's stock has soared nearly 70 per cent in 2024, hitting a market cap of $5.7 billion—a two-decade high. Analysts are optimistic, forecasting continued growth and a bright future for the analog chipmaker, even as Intel faces financial struggles.
The failed acquisition deal, which would have seen Intel pay $53 per share—a 60 per cent premium—was cancelled in mid-2023 after approvals from Chinese regulators were not secured in time. While the announcement initially caused Tower’s stock to plummet to $22, the company rebounded strongly under the leadership of CEO Russell Ellwanger.
Speaking to *Globes* in March 2023, Ellwanger reflected on the cancelled deal, saying: "I won't say it's good that the deal didn't happen, but it wasn't a big slap in the face. We now have capacity... and on the whole, it was a positive experience."
Tower emerged from the cancellation with a $353 million compensation payment from Intel, boosting its third-quarter 2023 profits by $290 million.
Chipzilla’s decision to acquire Tower was part of a foundry strategy to produce chips for third parties. However, the strategy faltered, leading to Intel laying off thousands of employees and seeing its stock plunge by 60 per cent in 2024.
Meanwhile, Tower not only weathered the fallout but outperformed the Philadelphia Semiconductor Index (SOX), which rose 13 per cent last year. Analysts credit this to Tower’s focus on RF/SiPho (silicon photonics) chips for data centres and expanding its market share in power management chips.
After the Intel deal collapse, Tower signed an agreement to use Intel's New Mexico factory for 300 mm chip production and invested in a new facility in Italy. Analysts at Oppenheimer predict the Italian factory will drive long-term growth, with full capacity expected by late 2025.
Oppenheimer analysts Sergey Vastchenok and Avivit Mannet-Kalil noted: "This potential has yet to receive full expression in investors' expectations and in the pricing of Tower stock, which is still traded at a deep discount to the semiconductor sector average."
They anticipate Tower’s revenue will grow from $1.42 billion in 2023 to $1.44 billion in 2024, with accelerated growth to $1.57 billion in 2025.