Savvy Trades and Investments

[abh3vt]

Buying some TSEM in the 10.90s on a pullback. Like this foundry chip supplier based on its adjusted forward PE (< 6x) and its positioning within the industry. Some of its major customers (RFMD, SWKS) are among the fastest growing semiconductor chip makers, benefiting from trends in RF (wireless) and image sensors.

Here's a good article to get you up to speed:
http://seekingalpha.com/article/2450305-towerjazz-a-towering-double-in-share-price

One highlighted top down summary from the last quarterly CC:

Let’s look now at the organic growth of the company, another area of great significant. I will refer to three things: the revenue growth from our top customers; two, the number of full mask sets or in other words products entering our factories; and three, design wins.

As Oren had mentioned, our top five customers by revenue in the second quarter of 2014 grew 50% as compared to our specific revenue from them in the second quarter of 2013. The same measure for our top ten customers shows a growth of 40%. All business groups have sales and roadmap activities within the top five, as well as the next five customer groupings.

Growth numbers that’s just mentioned can only be achieved by serving customers who are giving us the major portion of their market share within strong industry growth segments. We expect this trend to continue and within our third quarter forecasted guidance, the top ten year-over-year revenue would be a 47% growth, that being our revenue from the top ten customers.

The second quarter was a corporate all-time record for new full mask sets entering our Israeli and California factories at 242, up 80% from a 130 in the second quarter of 2013. First half of 2014 versus first half 2013 is up 70% from 252 to 410 new products entering the factories. These products typically take three to six quarters to reach peak volume production, which is then maintained typically for one to one and a half years. Hence the second quarter and first half records of new products are strong indicators of 2015 and 2016 continued core growth.

The last growth indicator is the amount of design wins. This is the first step in acquiring a new product or new customer. Second quarter also demonstrated a record in design wins. This is a longer term metric taking from six months to one and half years from the design wins until the product or masks that if will enters into the factory, and then three to six quarters to reach volume production.

To summarize, all of the above indicators are revenue growth from our top customers. New products entry in the Fab’s and design wins for long term potential are strong indicators that we are serving the right customers in the right markets, fuelling quarter-over-quarter and year-over-year top and bottom line improvements.