(Reuters) - Israeli firm Tower Semiconductor (NASDAQ:TSEM) forecast a decline in quarterly revenue on Monday as chip firms faced with a supply glut continue to correct inventory.
U.S.-listed shares of the contract chipmaker were down nearly 6% in premarket trading.
Over the past few quarters, semiconductor firms have refrained from placing new orders as they work to clear excess inventory built up as a result of high interest rates and sticky inflation.
Tower, which makes analog and mixed-signal semiconductors used mainly in automotives, forecast revenue of $350 million for the fourth quarter, with a variation of 5% - down more than 13% from a year ago.
Chip giant Intel (NASDAQ:INTC) had terminated its plans to acquire Tower Semiconductor in August after it was unable to get timely regulatory approval from China for the $5.4 billion deal. Approval from Chinese competition regulators is needed if companies involved in a deal have a sizable business presence in the country.
Operating profit for the third quarter, which included a gain of about $314 million net from the Intel merger contract termination fee, grew to about $362.2 million. The total termination fee is $353 million.
Intel will also offer foundry services to the company in a deal that will see Tower investing $300 million in Intel's New Mexico factory, the companies said in September.
Tower reported revenue of $358.2 million for the quarter ended Sept. 30, a decline of about 16% from a year ago.
Investors have raised concerns surrounding tech companies operating in Israel in light of the geopolitical tensions in the region. However, Tower has said it is placed to "continue seamless operations".
On an adjusted basis, the company earned 54 cents per share in the third quarter, beating a profit estimate of 50 cents per share, according to four analysts polled by LSEG.