Is Tower Semiconductor (TSEM) a Value Investment?

Strangely, the first casualty of the US government’s war on the Chinese semiconductor industry is an Israeli company Tower Semiconductor (TSEM).

The US Bureau of Industry and Security declared war on the Chinese tech industry with restrictions on the use and export of American integrated circuit technology and designs on 7 October 2022. Tower stock was trading at $46.70 on 15 August 2022. By 17 August 2023, Mr. Market paid $30.48 for TSEM.

Chinese authorities retaliated for this action by slowing the approval paperwork for Intel’s acquisition of Tower, Quartz speculates. Intel (INTC) terminated the acquisition “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement,” a press release states.

Consequently, Intel will pay a $353 million termination fee to Tower. Yet, Tower has lost enormous value. Intel was planning to pay $5.4 billion for Tower. Yet, Tower had a $3.468 billion market cap on 17 August 2023.

What is Tower?

Tower Semiconductor Limited (NADSDQ: TSEM) operates semiconductor foundries or fabs.

A semiconductor foundry is a factory that manufactures silicon wafers. To explain, all the chips that run our electronic devices are silicon wafers. Hence, graphics…