Tower Semiconductor's stock experienced a sharp intraday decline of 5.13% on Wednesday, contrasting with its earlier pre-market gains following the release of its fourth-quarter results.
The semiconductor foundry reported record quarterly revenue that slightly beat analyst expectations, alongside earnings per share that surpassed estimates. The company also provided first-quarter revenue guidance above consensus and announced significant capital expenditure plans for capacity expansion.
However, the stock's downturn appears linked to a disclosure in the company's earnings release regarding a contract dispute with Intel. Tower Semiconductor revealed that Intel has recently expressed its intention not to perform under a September 2023 agreement to manufacture 300mm wafers for Tower's customers at Intel's New Mexico facility. The parties are currently engaged in a mediation process to resolve the dispute, creating uncertainty around this strategic manufacturing capacity.