Tower Semiconductor Ltd. (TSEM) Q4 2024 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Tower Semiconductor Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in listen-only-mode. After the speaker's presentation, there will be the question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Noit Levi, SVP, Investor Relations. Please go ahead.

Thank you and welcome to Tower Financial Results conference call for the fourth quarter and fiscal year of 2024. Before we begin, I would like to remind you that some statements made during this call may be forward-looking and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected. These uncertainties and risk factors are fully disclosed in our forms 20-F and 6-K filed with the securities and Exchange Commission as well as filings with the Israeli Securities Authority. They are also available on our website. Tower assumes no obligation to update any such forward-looking statements. Please Note that the fourth quarter and fiscal year 2024 financial results have been prepared in accordance with US. GAAP. The financial tables and data in today's earnings release and in this earnings call also include certain adjusted financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements that established with the Securities and Exchange Commission. The financial table include a full explanation of these measures and the reconciliation of these non-GAAP measures to the GAAP financial measures. We have a supporting slide deck that complements today's conference call. The presentation is accessible on our company's website and is also integrated into today's webcast for your convenience. Now I'd like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead.

Hello, everyone. Thank you for joining our call today. During today's call, we'll provide our financial highlights for the fourth quarter and the fiscal year of 2024, reviewing strategic developments of the year and outlining our vision for the future, including steps we are taking to ensure sustained growth now having entered into 2025. Please find the 2024 financial details in the supporting slide deck. At the onset, and looking back at 2024, I take this opportunity to express gratitude to our employees for their dedication and hard work to our customers and supplier partners for their collaboration and to our shareholders for their continued trust and support. Together, we have built a strong company, enabling us to capitalize on the great opportunities that lie before us. We concluded 2024 with an annual revenue of $1.44 billion, a net profit of $208 million and a fourth quarter revenue of $387 million, representing in year Q1 to Q4 revenue growth of 18% and fourth quarter to fourth quarter year-over-year growth of 10%. We guide the first quarter of 2025 to be a midpoint of $385 million, plus/minus 5%, which midpoint represents about 10% first quarter year-over-year growth. We target year-over-year growth for '25 with sequential quarter-over-quarter revenue increases within the year, with an acceleration in the second half of the year as our capacity investments continue to progress through customer qualifications with the ensuing production shipments. We will now present the 2024 revenue breakdown for a major technology platform and the expected trend for 2025. Later in the call, we will provide summaries of the technical advancements achieved in 2024, which continue at this time in order to not just maintain, but to grow these specific market shares. The revenue breakdown by technology and by end market application is shown in Slides 5 and 6, respectively. RF Infrastructure revenue was about $241 million or 17% of our corporate revenue in 2024. In 2025, we target strong growth in the RF Infrastructure revenue, quite significant as this is on top of a near doubling in 2024 over 2023 with a more than tripling of SiPho revenues in 2024 to $105 million for that year. RF Mobile revenue was approximately $418 million, 29% of our corporate revenue in 2024. After achieving strong growth in this segment, in 2024 over 2023, we anticipate some decrease in RF mobile in 2025, mainly as a result in the present Android market as forecasted by our customers. However, within this context, we target growth in our more advanced 300-millimeter platform, signifying market share wins for us and our customers, promising continued growth as the market recovers. Power management and discrete revenue was about $426 million or 36% of our corporate revenue in 2024, broken down evenly between IC and Discrete revenue. Based on the current customer forecast, we target growth for the Power Management business unit in 2025 with the highest growth for advanced 300-millimeter platforms. Due to the impact of having discontinued Fab 1 large margin -- I'm sorry, lower margin, legacy 150-millimeter activities, discrete business is expected to decrease in 2025 versus 2024. Sensor display revenue was about $221 million or 15% of our corporate revenue in 2024. Based on the current customer forecast, we target 2025 moderate growth for this business unit. Mixed signal and CMOS revenue was about $105 million or 7% of corporate revenue in 2024 targeted with moderate growth in 2025. Now we will provide additional color for our major business platforms. RF infrastructure. RF Infrastructure was our fastest-growing segment in 2024, riding on the megatrend of scale up and scale out of cloud computing and AI clusters. Even before the announcement of the Stargate program by the US President last month, several hyperscalers had committed to significant investments driving strong demand for electronic and optical components that require advanced silicon germanium and silicon photonics technology. To that effect, our silicon germanium platform has seen rapid growth throughout 2024 and is forecasted to continue so in 2025. We take pride in being the foundry of choice to leaders in this industry. building components such as CDRs, drivers and TIAs for optical transceivers in pluggable and re-timers for active cables. While we have recently received a reduced forecast for active copper cable silicon germanium components, we have, at the same time, received upside orders for silicon germanium optical transceiver components. And as such, we see continued growth in silicon germanium without interruption. To support all customer growth in 2025 and beyond, we are bringing up our high-demand silicon germanium platform in both our San Antonio and Migdal Haemek factories, while adding incremental tooling to Newport Beach factory as part of our announced $350 million investment in capacity. In addition, we have released 300-millimeter silicon germanium PDKs in our Uozu, Japan factory, and have a lead customer already in product design. 300-millimeter tools will add additional silicon germanium capacity at larger wafer form factors. Our silicon photonics platform continues to gain strong market share at 400G to 800G and is now in volume production at 1.6T. We are working closely with our partners including six out of top 10 leading optical transceiver module makers in the world, of which the top two, namely InnoLight and Coherent, press released our multi-generation co-development partnerships. We highly value these customer partnerships, yielding continuous world-leading best-in-class technological advancements. To support the strong growth, we are bringing up our SiPho platform in our San Antonio factory and have also released a full PDK for 300-millimeter Uozu factory. 300-millimeter enables our SiPho customers to more easily address the future potential needs of CPO architecture that combine advanced SiPho technology with 2.5D integration of optical and electrical compliance. The added capacities mentioned for SiGe and SiPho are in various stages of customer qualification with expected shipments and result in high-value incremental revenues in Q3 and Q4 of this year. Finally, we continue to work with our customers to bring to market next-generation 400-gigabit per lane technology, targeting the upcoming 3.2T standard. To note, we have already demonstrated with a lead customer bandwidth consistent with the 400 gigabit per lane speed requirements needed for the 3.2 standard. We see further application of our leading SiGe and SiPho technologies outside of the optical transceiver markets. For example, we announced our partnership with Renaissance in the emerging SATCOM market where phased array ICs for terrestrial disk antennas built using SiGe technology promise strong growth with the proliferation of satellite-based Internet services. With SiPho, we are working with several customers in emerging areas of automotive, LiDAR, photonics-based gyrometers and photonic quantum computing. In our RF mobile market, despite some headwinds with weaker customer forecast in '25 versus '24, particularly for Android-based devices, we see a strong positive trend towards higher-end 300-millimeter RF SOI technologies, which not only offer improved performance to address higher performance markets but also die shrinkage, allowing both Tower and the customer to maximize margin. In addition to existing markets, we continue to invest in new technologies, such as the triple play process announced with Broadcom for WiFi 7, which offers industry-leading integration of a power amplifier, low-noise amplifier and switch on to the same die in the single die form factor to support high-end WiFi functionality, hence, a much smaller footprint than previously possible. Looking at our power management business. During 2024, we executed the transfer of our flagship advanced 65-nanometer BCD platform to Albuquerque to take advantage of the large capacity available to us as part of the previously announced agreement with Intel. In the fourth quarter, we delivered successful prototypes to lead customers and based on the success, have received our first production PO a major milestone achieved ahead of plan. We have extreme customer interest in these flows well beyond, it could be supplied in Uozu Japan. Additionally, in Q4, we announced the release of our next-generation 300-millimeter power management platform, which promises as much as 60% lower conduction losses versus prior platforms critical for power management ICs used within lithium-ion battery operated products such as smartphones, tablets, wearables, a large and growing market, presently at about $6 billion. Turning to sensors and displays. There are several trends shaping this market that have given and continue to give impetus to our priorities and investments, among which Industrial Sensors are transitioning to 300-millimeter platforms, enabling denser logic, smaller form factors and higher resolution pixels. We demonstrated 100 megapixel and 300-megapixel high-speed global shutter stack sensors with 2.47 micron charged domain pixels. Medical and dental sensors, some 200-millimeter CMOS products are shifting to lower-cost eXo platform whilst high-performance application, mammography and extra dental x-ray drive demand for 200- and 300-millimeter stitch CMO. Hence, our development activities in medical and dental, are focused on next-generation CT detectors, 200-millimeter extra-oral X-ray and 300-millimeter x-ray, including having released a 300-millimeter more cost-effective layer reduced lean flow PDK, enabling our customers to battle on price as well as with performance. OLED on silicon is a significant large incremental business growth opportunity for CMOS back plane for high-resolution micro-OLED displays, known as OLED on silicon for AR, VR, XR application. Our expertise and long performance history and large-format images position us as a leader. First, OLED on silicon prototypes are targeted to ship second half of this year, featuring unique ultra-low leakage transistors, combined with high K capacitors. Looking at utilization. We are strategically repurposing certain capacities across multiple fabs to further enhance our SiGe and SiPho capabilities. While this may result in lower overall utilization rate in the near term, it is a crucial step towards aligning our production with the evolving needs of our customers. By focusing on these advanced process technologies, we are positioning the company for sustainable long-term growth ensuring we meet increasing demand. This initiative optimizes our production portfolio and underscores our commitment to innovation and fast execution to maintain market leadership in a rapidly evolving industry. In the fourth quarter, Fab 1 operated at 70% utilization with all activities now fully consolidated into Fab 2. Fab 2 and Fab 9, where we are driving SiGe and SiPho capability -- capacity activities operated at approximately 55% utilization. Fab 3 was at 70% utilization. Fab 5 at 60% and Fab 7 300-millimeter at 90% foundry utilization with the highest process layers to date. Non-CapEx projects are ongoing and Fab 7 to maximize shipments from fab mix changes and with the agreement with NTCJ utilizing some of their capacity. To summarize, in 2024, we've shown our commitment to innovation, excellence and growth. We've made significant progress and built a strong foundation for the future. Looking ahead, our investments and focused efforts are already delivering positive results positioning us to target year-over-year growth with significant quarter-over-quarter growth in the year. We're actively engaged in seizing new opportunities to grow our served markets and provide continued leadership. Thank you for your continued trust and support. We look forward to sharing with you our achievements throughout what will be an exceptional year ahead. With that, I'll turn the call to our CFO, Oren Shirazi. Oren?

Hello, everyone. Earlier today, we released our financial results for the fourth quarter and for the full year and also released our balance sheet. For the fourth quarter of 2024, we reported revenue of $387 million, a 10% increase over the same quarter of the prior year, thereby achieving the target we provided one year ago, demonstrating quarter-over-quarter revenue growth for each quarter in 2024 against the previous 2024 quarter. This resulted in an 18% revenue increase from Q1 '24 to Q4 '24. For Q1 '25, we guide $358 million revenue, plus minus 5%, which represents 10% year-over-year revenue increase. Gross profit for the fourth quarter of '24 was $87 million higher as compared to $84 million in the fourth quarter of the prior year. Despite being impacted by the headwinds resulting from added fixed cost and depreciation that the company took on for the first time following the commitment of operations in the Agrate 12-inch fab facility that the company and SD Micro share in Italy. Operating profit for the fourth quarter of '24 was $46 million compared to $45 million in the fourth quarter of the prior year. Net profit for the fourth quarter of '24 was $55 million or $0.49 basic and diluted earnings per share. Net profit for the fourth quarter of the prior year was $54 million or $0.49 basic and $0.48 diluted earnings per share. For the full year 2024, revenue was $1.44 billion. Gross profit was $339 million. Operating profit was $191 million, and net profit was $208 million or $1.87 basic and $1.85 diluted earnings per share. Tax expenses are recorded in our P&L for full year '24 and for the fourth quarter of '24 were at a low all-in tax rate of 5% and 4%, respectively, much lower than our long-term financial model mainly due to tax benefits recorded during '24, following a statute of limitations expiration and other tax-related benefits, which impacted 2024. However, please note that for the long-term model planning needs, one should continue to assume 15% will be our all-in effective tax rate as previously communicated. For the full year 2023, revenue was $1.42 billion. Gross profit was $354 million and operating profit was $547 million. This high operating profit included $314 million net from the Intel merger contract termination and $33 million of net restructuring income from the reorganization and restructure of our Japan operations. Net profit for the full year 2023 was $518 million, or $4.70 basic and $4.66 diluted earnings per share and included $290 million net income from Intel due to the merger contract termination and $11 million net of restructuring income. Moving to the balance sheet and future CapEx and cash plans. As of the end of December 2024, our balance sheet assets totaled $3.1 billion as compared to $2.9 billion at the end of '23, primarily comprised of $1.3 billion in fixed assets net of depreciation and predominantly comprised of fab equipment and $1.8 billion of current assets. The current asset ratio, reflecting the multiple by which current assets are larger than the short-term liabilities, is very strong at about 6x. Additionally, shareholders' equity reached a record of $2.64 billion at the end of December 2024. Our strong financial position enables us to plan the following investments in the strategic opportunities that support our corporate vision. One, we have committed to invest up to $300 million to acquire equipment and other CapEx that Tower will own in Intel's New Mexico fab facility, enabling us to ramp-up fab capacity and capabilities for our customers. About 15% of this amount has already been paid, and the remaining 85% of these CapEx amounts are forecasted to be paid in installments during the upcoming two years. Two, in addition, $500 million of total cash has been allocated to make investments in equipment that Tower is to own in the 12-inch fab in Agrate, Italy following the previously announced STMicro partnership. To date, we have already invested 80% of this amount, placed purchase orders for all the equipment and other CapEx required, and the remaining amounts are expected to be paid in the upcoming year. In addition, we are executing a $350 million investment plan to expand 5G capacity and capabilities for the qualification and ramp up of those technologies in our 8-inch and 12-inch facilities in Israel, Texas and Japan to serve our growing customer demand. Payments towards this CapEx investment plan are expected to be made in installments during the upcoming two years. Lastly, I want to note that all of our investments, including the SiPho and SiGe CapEx investments are included in the business strategy and financial model previously presented by the company and are required steps to achieve it. In this model, we outlined a revenue target of $2.66 billion per annum that could be achieved by fully loading our existing facilities, including the above-mentioned and 3G CapEx investments and our newly built and to-be-built capacity at the Agrate and New Mexico facilities, which revenue level could result in $560 million of annual operating profit and $500 million of annual net profit. Now I'd like to turn the call back to the operator. Operator?

Thank you. [Operator Instructions] And now we're going to take our first question, and it is coming from the line of Cody Acree from Benchmark Company LLC. Your line is open. Please ask your question.

Thank you, guys, for taking my questions and congrats on the progress. Maybe if we could start, Russell, with your thoughts about the mobile market, your comments there. If you can maybe help to size your expectation for contraction. And then just you mentioned Android, you didn't specifically talk about your Apple customers. And just comments recently from Skyworks that they lost about a quarter of their dollar content. I wonder if you have had any impact or that was factored into your thinking as well?

No, specifically, for what we believe that we're supplying into Apple, we don't see any reduction. As far as serving into Android, predominantly, we have customers that are serving multiple markets within Asia and their forecasts are down. It's not wildly down. And as stated, we have within a 300-millimeter portion of it, we do see growth this year for high-end activities, what we see is some of the 200-millimeter having been reduced. If you're asking for to what degree it would be reduced, I don't like giving a yearly guidance, but it's not overly substantial. It would be somewhere probably in the upper teens that I would say we would have a reduction in the RF Mobile business.

All right. Thank you for that Russell. And then maybe Oren, if you could talk about the incremental margin, just the contraction that you saw this quarter. If you can maybe help to frame how much of that was the Agrate ramp? And then what is that impact for the rest of the year?

Yes. Thank you. For the rest of the year, we don't expect any additional headwinds because like we explained previously, from this new baseline that we presented in Q4 '24, we expect the incremental model to work according to the past with the 50% incremental margin because all the headwinds were already included in this report. If you ask how much, so you see that if you compare Q4 '24 to Q3 '24, you'll see an increase of $16 million in the revenue, which by the 50% incremental model should have resulted in an additional $8 million gross margin. However, there is a minus six. So the difference between plus eight and minus six, most of that is attributed to Agrate headwinds.

All right, thank you very much.

Thank you, now we're going to take our next question. And the question comes from the line of Mahwish Mahbub from SIG. Your line is open. Please ask your question.

This is Bastien filling in for Mehdi Hosseini. So, Russell and Oren, thank you for taking my question. The guidance of Q1 of $358 million implies revenue down high single digit sequentially, which is in line with seasonality, but still growing year-on-year. I would assume that your RF infrastructure growth above seasonality, while discrete business should be impacted by discontinuation of the Fab 1. Could you elaborate on which segment do you expect to be above or below seasonality? And my follow-up is you started the production ramp on the 1.6 terabyte at several lead customers, could you give us an update on the timing of revenue? And when should we expect material contribution to revenue? Is it still on track for material contribution in the second half of '25? Thank you.

It's already a reasonable amount of revenue in the fourth quarter. I don't have at this point strong visibility in the specific POs that we'll be receiving second, third quarter for second half shipments. So I can't really predict what the mix will be. I have a much greater granularity on overall forecast. As far as your first question on what segments are stronger seasonally than the Q4 to Q1 seasonality. Certainly, if we were to look at it, you would have the SiGe, the SiPho and – yes, I would say also the mixed signal and the power as far as the entireties of them. They’re staying about at the same. CIS is actually a little bit stronger where we’re seeing the biggest seasonality is within the mobile.

Very helpful, thanks.

Thank you. Now we're going to take our next question. And the question comes from the line of Richard Shannon from Craig-Hallum Capital Group LLC. Your line is open. Please ask your question.

Thanks for letting me ask a couple questions here. Maybe on kind of RF Infrastructure, I guess, probably a multipart question here. I want to try to maybe pin you down -- pin you down isn't the right terminology, get a little bit more specificity on your thought process for growth in the RF Infrastructure business this year. As one proxy, one of your customers talked about this last week here about seeing what seems like an acceleration in their data center-related business. I know it doesn't have a complete overlap with you, but I think since you're a supplier to them, it makes, it seems like a good proxy. So maybe if you can kind of talk about whether you're seeing growth this year, anywhere near what you saw last year, which is obviously very strong. And then maybe as a follow-on to that, specifically, you talked about silicon photonics in the context of share gains when you get to 400 and 800 gig. Maybe if you could just provide more specificity on that, please?

I don't think I said share gains in 400 to 800 gig. In general, there's certainly a share gain in that SiPho really didn't exist very strong at all at 100 gig. So if you were to look at 400 and 800, that's where SiPho first came into the play, and it was put in there, although there's some back feet at 100 gig as well. I suppose a corollary there is that SiPho has equal benefits for 100 gig as it does at 400 to 800, meaning the ability to have very high scale by not having to have discrete indium phosphide components versus having a SiPho component with germanium and silicon, but the fact that not until 400 and 800 did SiPho really come into the market. That's why you would say that if you were to say, share of optical transceivers, obviously, it only started to grow at that level. There were some thoughts and internal playing around that if, for example, large learning model software would be driving step back in data center speeds, which I don't believe. But if it did, probably SiPho, now that it's proven, would have big growth in 100 gig as well. So I don't -- but if I understood your question, specifically, SiPho really only started to gain market at 400, but as well, it came into and backfilled into 100, but the biggest use of it is 400 and 800 and then going into 1.6T. But it's not intrinsic that it has no benefit at 100, it has the same benefits there as well. I don't know if that answers your question, Richard, but...

I'll follow-up on that I clearly made some incorrect notes when I heard that. So let me follow up on that one. Let me touch on RF mobile here. Obviously delineated the dynamic here between the -- or iOS and Android ecosystem. Maybe you can also delineate it in terms of wafer size here. It sounds like we're going to see a fairly strong shift, particularly with the Agrate capacity coming online this year. How do we see your exit rate of this RF SOI capacity towards 300 when you exit this year?

When I exit 2025?

Yes, please.

One second, let me look at the numbers, so I don't give you any wrong information. If we look at the RF SOI, 300 and 200, there was probably – two fifth of it was 200 in 2024, three fifth of it, plus/minus, was 300-millimeter. And if we were to look at our -- the forecast for 2025 is probably more on the order of for four fifths and one fifth.

Okay. That is helpful to think about that. Last question for Oren. Oren, if you could help us think about your depreciation load here. Obviously, you had a step up in the fourth quarter. I expect we'll see some more here going throughout the year. How do we think about the depreciation number for the year?

Just to clarify, what I just gave you was revenue breakdown, it wasn't wafer units, right?

Okay. All right. Thanks for that clarification. Oren, depreciation, how do we think about that for the year as well as the exit rate, particularly as we add in from both Agrate and New Mexico?

Okay. In New Mexico, you should not expect any depreciation this year because we are just qualifying the factory. We -- like I mentioned, we only so far invested 15% of the $300 million. So obviously, if we only paid for 15%, only part of the 15% will have been arrived and installed and qualified and start depreciation. So, it will not be at all this year. Agrate, it's already baked into Q4 depreciation number. And so, you can see, I mean, we have disclosure of depreciation is actually -- you can also learn it from the report, which total depreciation is about -- including amortization of RSUs and everything is $65 million a quarter. So -- but it's already in the numbers. So whatever Q4 run rate will continue, the $65 million quarter.

Run rate will continue. Okay. Fair enough. That is all for me. I'll jump online, guys. Thank you.

Thank you. Now we're going to take our next question. And the question comes from the line of Lisa Thompson from Zacks Investment Research. Your line is open. Please ask your question.

Hi, good morning. My question is about your expectations for revenue growth this year. You said to expect it sequentially. Do you expect to do similar or better than the 18% from Q1 to Q4?

We didn't guide for the exact revenue from Q1 to Q4. We said three things. We said that we target the year to be higher than '24 and we target sequential revenue growth, and we target that H2 will be strong. So stronger, but we cannot talk about specific numbers for Q4 guidance.

Okay. And -- and in the second half, you said revenues would be helped by added capacity. Can you just list maybe in order of what capacity is coming online that's going to be the biggest contribution to revenues?

I think it's mainly the SiGe and SiPho capacity, also Agrate capacity, but mostly the 5G from the $350 million plan, not that everything will be qualified and installed this year, but that's main driver.

Okay, great. Thank you. That's my only question.

Thank you. Now we're going to take our next question. And the next question comes from the line of Matt Bryson from Wedbush. Your line is open. Please ask your question.

Yes. I have a couple of questions if that's okay. First one is, I think heading into Q4, you said you thought you'd be able to get to roughly $150 million run rate on your silicon photonics business. And previously, I think you targeted doubling that business in total in 2025. Did you hit that target? And I guess, is that assumption still valid for the silicon photonics business?

Yes, we at least hit the $150 million annualized run rate on Q4. So that was definitely the case. What we said that we targeted wasn't doubling against the Q4 run rate, we had targeted a doubling of the 2024 revenue, right? So, it's not that we are targeted at any given point, a $300 million SiPho 2025, but yes, that was statements that we made, and that's still within our target, absolutely. But yes, we did achieve or exceed the $150 million run rate.

That's great to hear. And then just you were talking about SiPho active cables being down a little bit in 2025. There's been some conjecture that as there's a shift to optics that there may be less demand for active copper cables. Is there anything fundamental going on like that? Or do you think it's just inventories or something with your specific customers, I guess, longer term, how do we think about that business?

I think in the very short term, it was stated in the MACOM financial release that NVIDIA has changed from a 2 x 36 to 1 x 72 had an impact on the ACC, although I believe that there's many other needs and drives of ACC for the architecture. So, I don't think that active copper cable and active optical cable for that matter is going to reduce in the long term, I think it will grow. But there was reductions in forecast, at least -- and this is -- I'm not speaking out of turn, it was in the MACOM release related to that change architecture.

Awesome. And my last one, Russell, is just you talked about a couple different places where you're seeing some shift from 200-millimeter to 300-millimeter wafers. I mean how do we think about that impact on your model? Is there -- I'm assuming you get some step up in ASP, but there's some required step-up in investment? Or is that production already there? And so, then that's just an improvement in ASP.

I think it's within the model that Oren has spoken with you about in the meetings that you had with other of our finance. Certainly, the 300-millimeter has a higher selling price, but it also has a higher substrate price. So, the margin impact is very similar. The revenue impact is a bit higher. But the big thing is that a 300-millimeter at this point, we are having greater integration of more advanced components such as the LNAs, which in and of itself then can drive higher incremental margin. But those are only within the models that we've given when we give the $2.7 billion model, we did forecast within the next years, that's the bulk of everything we're doing with RF SOI specifically would be at 300-millimeter.

Awesome. And I guess last one for me is just on the RF side of things. You talked about your expectations related to the downtick in Android contribution. Just want to clarify when you were saying kind of teens down -- or I think it was high teens down, is that the entire RF piece for just the Android piece? And then also when you're looking at that business, is that more inventory rightsizing? Is it more customer base? Is it something that's changed structurally in that business? Just trying to figure out how to model it beyond the next few quarters?

It's really an excellent question. The -- we really do serve leading customers into the Android market, specifically into Asia. When there's a good year, fortunately, within that year, customers build greater inventory because they never want to be short and the minute that they're short to a lead phone maker, they open the door to be losing market share. So -- and then you have the knee-jerk reaction that if demand goes down for this or that reason, the impact in the short term is a big correction with our customer. So, I believe that there's weakness within Android in Asia, specifically in China. But within that, I think it's not necessarily that the market is as far down as far as what the leading makers are selling. I think it's that it is down, but the inventory of our customers is more than needed for the short term. The expectation internally is that it will recover within this year. But that I honestly cannot forecast. I can only state where we're sitting now with customers, and that's a very honest answer where we sit. So, the what we're doing within mobile itself is down about upper teens this year by our forecast. But I speak specifically with our lead customers on a very regular basis. And that's their present forecast. They don't want to give us numbers that they cannot meet. But the general belief and consensus is that numbers can be substantially better.

Awesome. I really appreciate the color.

Thank you. Now we're going to take our next question. And the question comes from line of Cody Acree from Benchmark Company LLC. Your line is open. Please ask your question.

Maybe, Russell, if I can just get a quick clarification there on mobile, and then I'll look at another one.

What you said Cody, you broke up a little bit.

Just a quick clarification on your statements on mobile into the high teens. Is that just your Android piece or your Android plus your iOS piece.

That's everything. I don't have it broken down right in front of me, but that's everything that we serve.

Okay. And then any help with your comments about first half to second half acceleration, any way to help weight the year?

More highly weighted in the second half; just joking, Cody. Yes, I think the Q1 reasonable quarter year-over-year, certainly, meeting slightly above expectations, whatever. But in Q2, we said quarter-over-quarter growth. But then we expect very notable, measurable growth in the third and fourth quarters. As Oren had stated, we don't really want to give a long-term guidance at this point. As far as revenue increase when we went into 2024, you were in that -- the same call a year ago, and I was asked if I expected year-over-year growth. And I said I would be highly disappointed if we didn't. And last year was a very tough year. But -- and that was off of the Q1 that was not so robust and we did have the year-over-year growth. If you were to ask me about year-over-year growth this year, I certainly expect year-over-year growth and market year-over-year growth. If it's not really a reasonable amount of number that's adding to the revenue this year would be more than disappointed. So, the second half should be very strong, how strong it's not going to be breaking this orbit, but it will be market increases against the first quarter for sure. And something that I think we'll all be proud of to be able to report.

Very good. Very helpful. And then maybe for Oren, if you could just talk about your OpEx expectations especially as we go into the first half spending, but any comments on the full year would be helpful as well.

No, no, we expect the baseline of OpEx as was released in Q4 to stay flat, during the year it's fixed cost. And Agrate's already baked in the numbers. So, we don't expect to increase.

Any seasonal increases?

No. It's fixed cost. So they are pretty much linear over the year.

So no pay raises is what I'm hearing?

To employees. Should be -- if there will be, there should be offset by cost efficiencies, right?

Okay, excellent. Thank you.

Thank you. And now we're going to take our last question for today. And the question comes to land of Richard Shannon from Craig-Hallum Capital Group, LLC. Your line is open. Please ask a question.

Great, thanks for taking my follow up here. It's in the power bucket here. Russell, if I took good notes here, and clearly, I haven't in parts -- in other parts of the call here, but I think you said you were targeting growth in the power management business. Does this include both the Power IC and Discrete that you've previously talked about separately it just in the Power IC bucket. I'm not sure what the terminology means here?

No. I said that the discrete business would be down year-over-year and the Power IC itself will be up year-over-year. That's our target, but -- power discrete would be down.

Okay. And if we put those together collectively?

Should be up.

It should be up. Okay. Fair enough. That's all for me. Thank you.

Thank you. There are no further questions for today. I would now like to hand the conference over to your speaker, Russell Ellwanger, CEO, for any closing remarks.

Yes. Thank you for your interest. Thank you for the good questions, enjoyed them. It really is a very exciting time, and we're -- I think performing very well to market needs and market changes. So much has happened so much news just recently, impacting data center impacting potential data center architectures. In general, where we're at and what we're doing within the infrastructure space is leading edge with very key customers. We expect that it will maintain being a very strong market for us with really multiple generation activities going on with the leaders to maintain leadership there. We backfill that with very strong power management activities that will continue to grow, very strong demand now being qualified and further generation developments in a very high-capacity factory in Albuquerque, New Mexico. And then we have other base technologies, that continue to provide good margin revenues such as the CIS, not necessarily huge growth engines, but also not necessarily something that's requiring a lot of resources. Within that, a new served market with back plane for OLED on silicon, we expect that to be a very big growth engine for us in coming years and prototyping this year, as I had stated earlier in the transcript. We have strong customers, extremely good technologies within RF mobile specific the RF SOI. And we look forward to that continuing to grow. Very excited about the activities in Agrate, the customer qualifications, continuous qualifications there and hitting high-level utilizations in that factory within this year. So, all in all, I think we're in very, very good position. Maybe one bit of added color that I can give, it's maybe obvious from the call. But when we talked about sequential quarter-over-quarter growth, we also see within that, Q1 greater than Q1 '24, Q2 greater than Q2 '24 and Q3 greater than Q3 and Q4 greater than Q4. So, within that, if that helps your modeling, that's something very real, and that shows that it is market increases where we think, again, the greater than for Q3 and Q4 should be substantially greater than. So, with that, I'd like to end the call and say, truly, we're very excited about where we're at, where we're going, opportunities in front of us and to continue to share the excitement and achievements with you throughout this year. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.