Tower Semiconductor Ltd. (NASDAQ:TSEM) Q3 2019 Earnings Conference Call - Final Transcript

Nov 13, 2019 • 10:00 am ET

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Tower Semiconductor Ltd. (NASDAQ:TSEM) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] The first question is from Cody Acree of Loop Capital. Please go ahead.

Analyst
Cody Acree

Hi, guys. Thank you very much for taking my questions. First off, Russell, could you just talk about, excuse me, puts and takes that went into your December quarter guidance. I think given what we've been hearing out of some component vendors, but largely out of the end-OEMs in both the data center and in the RF markets, where there is same sort of naturally lead [Phonetic] to some more growth, if not in the September, definitely in the December quarter. Could you speak to that please?

Executive
Russell C. Ellwanger

Certainly. So, as stated, we have not yet seen a rebound in data center. I am not sure we will be referring to that as quoting strengths within data center from our end customers. But the strengths that they might be seeing again is off of inventory that they already have in hand. So...

Analyst
Cody Acree

Yeah.

Executive
Russell C. Ellwanger

-- as stated in direct communications with lead customers, they believe now that they have somewhere over quarter to a bit more than a quarter of inventory to burn off. So our order level in data center is not yet rebounded even close to what it had been in the run rate of, the end of 2018. I did state that we are seeing some stabilization there due to the fact of 5G infrastructure, but the amount of parts for 5G infrastructure and the size of the parts, is at this point, not enough to compensate fully for the reduction that we've seen within data center. But that data center, we are very optimistic about from recent dialogues and updates that the orders will be coming back within Q1, and the shipments will be coming and ramping in Q2, throughout the year of 2020.

So that's one area. And the other area that I had mentioned that we had had very, very nice growth in -- well, okay, so that's a downside. The other strong area of down for us is within Power discretes.

And it's been press released who our main customers are within there. And, but it's not just our main customers. The entire power discrete market remains weak. That will also pop back at some point here, but it is weak at this moment. So those were two of the bigger, or maybe the two biggest downs that we have against our base revenue that we were having its run rates in 2018, and maybe even at the beginning of this year.

So that's the down part of it. The up part of it where I refer to the organic growth, and the organic growth end means that you already have to make up for multiple 10s of millions of the base having fallen out, so in organic that I'd say a 4% quarter-over-quarter or 11% year-over-year, and that's a very, very big growth and that came in very, very strongly within the RFSOI .

As well as within