Ladies and gentlemen, thank you for standing by. Welcome to the Tower Semiconductor third quarter 2021 results conference call. All participants are currently in a listen-only mode. Following management's prepared statements, instructions will be given for the question- and- answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded November 8, 2021. Joining us today are Mr. Russell Ellwanger, Tower CEO, and Mr. Oren Shirazi, CFO. I would now like to turn the conference over to Ms. Noit Levy, Senior Vice President of Investor Relations and Corporate Communications. Ms. Levy, please go ahead.
Thank you, and welcome to Tower Semiconductor financial results conference call for the third quarter of 2021. 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, F-4, F-3, and 6-K filed with the Securities and Exchange Commission, as well as filings with the Israel Securities Authority. They are also available on our website. Tower assumes no obligation to update any such forward-looking statements. Please note that the third quarter of 2021 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 requirement as established with the Securities and Exchange Commission. The financial tables include a full explanation of these measures and the reconciliation of these non-GAAP measures to the GAAP financial measures. Now, I'd like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead.
Thank you, Noit. Welcome, everyone. Thank you for joining our call. Our revenue for the third quarter of the year was $387 million, a sequential revenue record for Tower, which represented 25% quarterly year-over-year total, and 40% year-over-year organic growth. In the order of revenue dollars, the technologies that drove the 40% organic growth was firstly RF CMOS at about 75%, predominantly driven by RF SOI. Second was sensors at about 65% on Q3 versus Q3 2020, with industrial sensors as the major contributor. The third significant contributor was power IC at about 50% year-over-year organic increase.
We guide the fourth quarter of the year to continue to grow to a mid-range guidance of $410 million, representing quarterly year-over-year a 19% total growth and 26% organic growth, which according to mid-range guidance, will yield an annual revenue of $1.506 billion for 2021, which would be a 19% total and 28% organic full year growth against the $1.266 billion for 2020. Looking into our specific businesses, during the third quarter, our RF mobile business was 26% of our revenues and is expected to continue to grow in the fourth quarter and into 2022. Growth is driven by market share increases, accelerated by increased RF content in 5G handsets.
As 5G requires the most advanced technology, for which we provide a higher value, this change in mix drives increases in margins. Demand is very strong in both 200 mm and 300 mm, providing returns on capacity investments to date and giving confidence on the return for our present and planned investments. The RF infrastructure business, serving telecom, and datacom end markets with our industry-leading silicon-germanium silicon photonics technology, was about 13% of our corporate revenues. During Q3, we witnessed the first significant revenue ramp of our silicon photonics flows. This is the highest margin we serve and is expected to be a meaningful contribution to our bottom line in 2022. This quarter, we announced next generation silicon photonics process flow, which will include lasers and potentially other III-V components fully integrated into our high volume silicon process.
This can more than double our revenue potential in this market, with the laser being the most valuable single component in an optical communication system. Last week, we announced a partnership with ANELLO Photonics to productize a new low loss waveguide technology, both through ANELLO's own products, which include precision gyroscopes using silicon photonics to replace optical fiber coils, as well as in a new foundry offering for a wide scope of applications in automotive LiDAR, biosensing, and quantum computing. Our power IC business was 16% of our total revenues, with strength in automotive, industrial, and consumer segments. We continue our strong position in automotive battery management area. Additionally, having now signed a long-term capacity agreement with a market leader. Automotive battery management is expected to significantly outpace the overall power IC market due to the worldwide push for electrification of the vehicle.
Beyond this market, we are gaining overall market share through technology leadership in what is the largest portion of the overall analog market. Our power discrete was 16% of our revenues. Like power ICs, growth is broad-based, but led by automotive applications. As discussed last quarter, we anticipate the power discrete business to level off while we focus our CapEx expansion on other higher-margin segments. Our imaging business represented more than 15% of our revenues. We continue to see very strong demand in the industrial and machine vision markets, as well as the medical and dental X-ray markets. Our customers in these areas are highly interested in securing capacity for the coming years, seeing long-term market demand. Regarding display, we continue in a substantial partnership for the development of backplane micro OLEDs, mainly for the VR display market, a very fast-growing market.
The automotive portion of our business represented 12% of our corporate revenues this past quarter, supported by most all of our technology flows. We have been a dependable supplier to the automotive market for many years with our industry-leading offerings in imaging and sensing, wireless and wireline communications, mixed signal, and power management. We are not only continuing to invest in new capacity and technology roadmaps, but are also enabling innovative technologies such as solid-state LiDARs based on our silicon photonics open platform. We recently partnered with the University of Southern California to announce a breakthrough development in LiDAR IC technology designed for advanced driver-assistance systems and ultimately self-driving cars. As stated, we recently signed a long-term capacity agreement with a market leader in battery management solutions, ensuring a growing position serving this mega trend of vehicle electrification.
Moving to utilization, the following are the third quarter foundry layers, all numbers given in 8-in equivalents. As well, there is a full table of all numbers in our Q3 financial highlights presentation that will be available on our website at the end of this call. For 150 mm, 455,000 layers were processed, up 55% as compared to Q3 2020, and up slightly from the previous quarter. For 200 mm, 6,197,000 layers were processed, up 28% as compared to Q3 2020, and up 5% as compared to the previous quarter. For 300 mm, 1,539,000 layers were processed, up 57% year-over-year, and up 10% as compared to the previous quarter.
We will now give more color on the revenue and margin impacts of our capacity growth, including the impact of investments in certain capability tools to enable a richer shipment volume mix. As stated, the Q4 2021 mid-range guidance represents a 26% year-over-year organic growth. We've created this growth through three vectors. Firstly, 50% of this is pure capacity increase. Secondly, 25% of the revenue increase is from a richer mix, meaning higher value, higher ASP shipment mix. Thirdly, 25% is by ASP increases of existing products, which customers participated in predominantly to secure longer-term committed capacity. All the above contributes to strong increases in top-line revenues and margins, targeting to be above 15% net profit margin in 2022.
In 2021, our organic growth resulted or will result in a Q4 2021 annualized organic revenue of $1.27 billion, slightly more than the 2020 total revenue. This $1.27 billion of revenue excludes the circa $400 million of Panasonic now Nuvoton and San Antonio Maxim long-term contracts that were part of the 2020 revenue. Including those long-term contracts, we end 2021 with mid-range fourth quarter revenue guidance representing a $1.64 billion annualized revenue. Longer term, our CapEx initiatives, which will experience full ramp in 2023, and with the addition of the initial 2023 revenue ramp of the Agrate factory, should allow greater than 30% organic growth on top of the present 26% organic growth guided for the fourth quarter of 2021.
From that point, revenue and margins should continue to increase as the Agrate fab continues to ramp through to 2026. Such capacity increases are fully spoken for by customers. With that, I'd like to turn the call to our CFO, Mr. Shirazi. Oren, please.
Hi, everyone. We released our quarterly results today presenting an additional record revenue reflecting 25% year-over-year total revenue increase for the third quarter of 2021 or 40% organic increase and resulting in significant increases in our growth, operating and net profit margins, as well as in cash flow from operating activities. The revenue and margins increases are driven by the significant customer demand we continue to see in mostly all of our fabs. We are executing the $250 million capacity and capability CapEx expansion plans in our existing fabs, as announced in previous quarters, and the ramp-up of the Agrate 12-in factory being established in Italy. I will start my review by analyzing the P&L highlights and then discuss our balance sheet and cash flow financial statements.
Revenue for the third quarter of 2021 was $387 million, $76 million higher year-over-year, reflecting a 25% total revenue increase and 40% organic increase. Organic revenues are defined as total revenue excluding revenue from Nuvoton in our Japan fab and revenue from Maxim in our San Antonio fab. Gross and operating profits for the third quarter were $85 million and $44 million, respectively. This gross profit is 60% higher year-over-year and 16% higher quarter-over-quarter. This operating profit is 131% higher year-over-year and 30% higher quarter-over-quarter. Net profit for this quarter was $39 million or $0.36 basic and diluted earnings per share.
Adjusted net profit was $45 million, resulting in adjusted basic and diluted earnings per share of $0.42 and $0.41, respectively, as reconciled in today's press release tables. This net profit is 157% higher year-over-year and 27% higher quarter-over-quarter. Comparing to the second quarter of 2021, the $25 million higher revenue in the past quarter resulted in $12 million higher gross profit, reflecting 47% incremental gross profit margin, $8 million higher net profit reflecting 33% incremental net profit margin, and $14 million higher EBITDA, reflecting 58% incremental EBITDA margin. Moving to our cash flow report and forecasts. During this past quarter, we achieved a record cash from operations at a level of $107 million.
We invested $88 million in fixed assets, mainly for manufacturing equipment, and we repaid $29 million of our debt, mainly a principal payment towards bond Series G issued in 2016. As we announced in our February 2021 and August 2021 quarterly financial press releases, this year we ordered a significant amount of equipment tools to increase our capacity and capabilities in our existing 12-in and 8-in fab in order to satisfy our customer demand. These equipment tools were mainly directed to Fab 2 in Israel, Fabs 3 and 9 in the U.S., as well as Fabs 5 and 7 in Japan. The total amount of such approved and issued purchase orders was $250 million as announced, which are payable between mid-2021 and the end of 2022.
In addition, we forecast that we will make CapEx payments for equipment tools for the newly built 12-in Agrate factory in an amount of $160 million in 2022 and an additional $240 million in 2023. Looking at the balance sheet, we demonstrated again a strong and stable financial position. Few points to note, shareholders' equity reached a record of $1.56 billion as of the end of the quarter. Current assets ratio, defined as current assets divided by short-term liability, strong at a value of 3.8x. Deferred revenue and customers' advanced balances under current liabilities and long-term liabilities in the balance sheet have increased by $19 million and $35 million as compared to the end of Q2 2021 and the end of Q4 2020, respectively.
And are expected to continue to increase, reflecting enhanced receipts from customers that have asked to secure more capacity and fund manufacturing equipment costs to grow their business potential and address their increasing demand. Now, I would like to turn the call back to the operator. Operator?
Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we pull for your question. The first question is from Raji Gill of Needham & Company. Please go ahead.
Yes, thank you for taking my questions and congrats on the strong momentum this year and the execution. Russell, I had a question on your comment about, you know, given the capacity that you're putting in place. The capacity that will come from Agrate in Italy. You had mentioned a 30% organic increase in revenue on top of the 26% in Q4 of this year. I'm wondering if you could elaborate a little bit further on how you're getting to that number. Any idea in terms of the timeline, the cadence of that revenue growth, and how we should think about it, you know, maybe across product line, because that's a pretty strong kind of long-term potential organic growth rate that you're indicating to folks. Thank you.
Thank you for the comment. I think we'd agree that it's a very strong target to be giving forecast, if you will. Specifically related it to the fourth quarter of 2023, we have a good amount of CapEx that has been ordered, some that will still be ordered, that will be coming fully online within 2023, even at the 200 mm levels. To give really a huge amount of color on the ramp, I don't wish to do that at this point. We will give our guidances for 2022 as we get into 2022.
What I wanted to point out is that the growth avenues of the company remain very, very strong, looking forward, and that even from this 2023, where I'm talking about a 30% organic. I said above 30% organic, actually, that is only the start of a ramp at Agrate itself. The prospects are very good. Where I mentioned previously of different areas where we're growing, you could assume that those should remain. We see a lot of strength as stated in present ramping of silicon photonics. I'd stated that we see that we would believe that will be a significant contributor to margins next year as the present price per layer of SiPho exceeds all else that we make, and for very good reasons.
It's, you know, a platform that enables a lot, that takes a lot of capability to make. It adds tremendous value to our customers. That will continue to grow. We're investing specifically for silicon photonics growth, and that will certainly not taper off in 2022. It will expand in 2022 and 2023. I stated that our RF SOI has benefited substantially from the content increases of 5G, but also from market share increases, and that we see that growth continuing into 2022. That's certainly an engine that we continue to put fuel into, both as far as growing capacity and as far as being very aggressive in figures of merit, to ensure that we have the best figures of merit in the world.
I mentioned the sensor area where we have very strong demand in industrial, staying customers are very involved in ensuring they have long-term demand there. In addition, I mentioned display, which is not something that has been a substantial revenue stream for the company in the past, but something that we expect will become a very substantial revenue stream in the future, beginning most likely end of 2023 and growing very, very strong in 2024 and 2025. Silicon germanium has been a big business for us, continues to be a big business. At the present, if you noticed, I didn't mention silicon germanium as one of the growth drivers for our Q3 40% organic growth, and indeed it wasn't.
Silicon germanium had very big growth in 2020 year for the benefit of the build of infrastructure for 5G. That infrastructure build that was done in 2020 is what's enabling all of the growth that we have within the high-end mobile platforms right now. The infrastructure demand is down slightly or maybe even slightly more than slightly, but the data center demand is up. SiGe, although it's growing, is growing not great at this moment from Q2 to Q3 and Q4, but it is staying stable. As we go forward into 400 Gbps , 800 Gbps in data center, the complexity of the laser drivers and the TIAs goes up substantially.
You know, we would assume that will mean larger die and more wafers for those applications, and hence the growth will still be driven in data center due to the complexity of the parts that will be needed. As well, that takes into account the silicon photonics, which is one of the big areas that SiGe or that the SiPho will be used for within the data center. I think that gives a summary of some of the areas of growth. One of the other underpinning areas that I'd mentioned is that of power management, having signed a long-term agreement with a leader in battery management, but having multiple platforms that really have market differentiation, and looking forward to our increases in capacity to enable that market to take off for us as well.
Hopefully that's enough color. I think it was a fairly detailed answer.
Yeah, no, I appreciate all the great insight. Russell, just wondering if you take kind of a bigger picture view, given the capacity constraints that you're seeing in the market, are you noticing any kind of fundamental changes in customer behavior? It would appear to be that the foundries, particularly high-performance analog foundries like yourself, would have a lot of leverage, bargaining power in a capacity-constrained environment, enhanced pricing power. Just wondering if the position of your company in this capacity-constrained environment is growing given the importance of semiconductors for all these kind of growth markets. You mentioned the long-term supply agreement with this, you know, leading auto battery management supplier. Are you seeing more long-term supply agreements across certain customers?
Is that a trend that you think is gonna last given the, you know, this capacity-constrained environment?
The answer to the first part of the question, very, very candidly, I believe that we've enjoyed very strong customer relationships for multiple years, being with or based upon the fact that our advanced roadmaps are predominantly aligned with customer needs and customer prequalification in choosing customers that we partner with for every next-generation technology node. Certainly, I would believe across the board in a capacity-constrained environment, more willingness of customers to invest in order to ensure capacity, and that only makes sense. If there's an abundance of capacity with low utilizations, obviously no one needs to invest, not the manufacturer, not the customer, to grow capacity.
When capacity is severely constrained, which is in the market right now, then customers are more than willing to participate to ensure that they have a capacity corridor for the present and the future. I think that that's eye-opening in that way, that you know, customers are not eye-opening necessarily, but customers are more willing to participate. That is just the sign of the times, right? It's not that that's. I think it's just the fact of the cycles that you're in, and when capacity gets constrained, when utilization is very high, customers are more willing, and there's more of a necessity to secure capacity. That was, I think, the first part of your question. What is the second part? The?
No, I was just saying, I think you might have answered it already, but, we're seeing, across the industry this phenomenon where chip companies are entering into longer-term supply agreements with their end customers, and then in turn, the chip companies are entering into longer-term supply agreements with their foundry partners. I was just wondering if this is something that, you know, as you said, is a sign of the times, or is this something more, you know, permanent?
I believe it will become more permanent. It's been catalyzed maybe because of the present, which there is many reasons why it happened, but I believe that it's a model that really makes sense. Our customers really wish to partner into, you know, they know that our success is the key to their success and vice versa. It takes sometimes a few moves that are a little bit drastic, which, you know, was the market, especially, you know, up and through now of this year, as far as capacity constraints from certain suppliers, that makes everyone think, "Oh, we have to address this maybe differently to ensure that in the long term, we have business continuity." You know, I think that that's good. Extremes put people more into a moderate median than if there were never an extreme.
I appreciate that. For just my last question, Oren, on the CapEx. So the Agrate fab, you'll start to ramp that in calendar 2022 and then continue it going forward. How do we think about the CapEx impact? Because I think when you announced the partnership with ST Micro, which is a very interesting partnership, I believe the CapEx discussion was still to be determined. You kind of mentioned the potential capacity output that this fab would create, but wondering how to think about the CapEx trend line going forward.
Yeah. We said, like you mentioned in the onset, that we expect to share the capacity space to approximate one-third of the space that will be built there, which is in early stages. I mean, the building is, I believe, already fully built and ready for tool install, and tools are starting to roll in as we speak. We really said, like you mentioned, that we will give more color on the amount of investment, at least for the foreseeable future, until the end of the year. This is what I gave in my prepared remarks, that we expect to invest in that factory this year, it will be nothing because only tools were ordered, but still no payments would need to be made because usually payments are made after tool arrival with some payment term. Next year should be $160 million in 2022, and in year 2023 should be additional $240 million, so a total of $400 million in the coming two years towards the capacity that we want to have there.
Thank you.
The next question is from Lisa Thompson of Zacks Investment Research. Please go ahead.
Good morning.
Hello.
Hi. Looking at all the moving parts in demand and pricing ability and where do you think 2023 you're going to be getting, like, your highest gross margins? Can you just kind of order which product lines?
As stated, silicon photonics, we had our first substantial revenue quarter in Q3. We see growth in that area throughout 2022, continued growth in 2023. SiPho is the highest price per layer of what we serve. That I would expect will remain our highest gross margin and might even go higher depending on some other activities that we might be doing there. I think SiPho will be the highest. SiGe stays very high. Our stitch field sensors is very high margin. I think that those would remain in those same areas.
After that, what would be the next in line?
We have very good margins in some areas of power management, in particular, specialty flows for battery management, for the electric vehicle. That has very good margins. Overall, the imaging margins are very strong. Even non-stitch field imaging margins are very strong. The high-end RF SOI is also very good. The point with RF SOI is that you have really very, very good prices per layer. You have expensive substrates. If you calculate the gross margin of a sold wafer, it's artificially lowered because the 300 mm or 200 mm RF SOI substrate is disproportionately high cost. The outside of starting material, the contribution margin of the layers is very good.
Okay, good. That helps a little. Since you just said you've already got sold out the Italian fab, what is actually gonna be made there, and who is it going to be sold to?
I said the capacity is spoken for.
Right.
We've stated that our first flows that we're bringing up there is RF SOI, and then the second flow that we're bringing up there is display, stitch field display.
Is it going to all European customers?
We've not stated who it's going to, but, I don't know that we've ever broken down as far as geography as to where the customers are, but the answer would be no.
Okay, great. Thank you. That's all my questions.
The next question is from Richard Shannon of Craig-Hallum. Please go ahead.
Hey, Richard.
Russell, hi, how are you?
Good, thank you.
Excellent. I apologize for my scratchy voice here. Got a couple of kind of questions kind of weaving into the same general topic here. Starting with your comments, and it was also in the press release about achieving 15% net margins for this year, and you talked about an organic growth number. I'm wondering maybe if you can help us kind of lead this down to the total revenues here and the gross margins and therefore flow through that are built into that assumption. Maybe if you can peripherally also talk about kind of the pricing dynamic that builds into that well.
If you can talk about, you know, how much prices are going up or anything to kind of kind of lead into those numbers, that'd be a great start, and I'll probably follow up on that.
No. I specifically will not give a guidance on revenue for 2022. I think that was one of the things that you were asking for. Outside of that, the price increases you can get out of my statement of the breakdown of the organic growth for the fourth quarter. I said that organic growth that was 26%, which would be somewhere about, you know, $65 million a quarter then. Of that, I said 50% was pure capacity. About 25% was a richer mix, and about 25% was ASP. I'm just doing the arithmetic. That would mean 6%, 6.5% increase in ASP.
Okay, that's helpful. Maybe I'll ask the question a slightly different way, in the manner we spoke about in the last calls here, which is talk about the incremental gross margin fall through for next year. Oren, you've talked about 50%-55% as a range. From various comments I've heard so far, it might suggest that should be meaningfully higher, certainly pricing, new flows like silicon photonics, etc. How should we think about that line?
No, no, I believe that 50%-55% is still valid. Obviously, you can also look at this what you asked in this way, that I mean, previous year, previous quarters, our net profit margin was about 7%-8%. This quarter was 10 point something. If we are adding 50% incremental growth and operating margin to the net margin, you may assume depends which geography it is, but between 35%-42% incremental net profit margin. Obviously from a baseline of 10%, when we will add the incremental 50% that has a fall through of incremental 35%, 40% after tax, it will be the way to achieve Russell's target to be above 15% next year.
Yes, SiPho, of course, SiPho is higher than 50%-55% incremental growth, but there is also other aspects which are lower. SiPho next year, I mean, 2022 is not, I mean, it's big numbers in definite growth compared to previous year, but still, it's not something which is that dramatic in volumes as compared to the total, which causes the blended everything to be above this 55% range. All in all, if you add up a 50%-55% to incremental baseline for any incremental revenue that you assume, you should reach the ability to cross the 15% net profit margin that Russell stated.
Okay. Perfect. That's very helpful, Oren. To follow on one of your comments here into silicon photonics, some good detail on the call here. Russell, maybe if you can talk about, you know, like how does the customer profile build up and the applications those customers are ramping for next year. If you can give us some color there, that'd be a great help. Thank you.
We have customers for SiPho that are involved in LiDAR. This is you know a pure solid state phased array instead of having a movable part for the laser. That's you know one area of the SiPho. I mentioned specifically with the press release with Anello that this is a silicon photonics driven gyroscope replacing optical fiber coil. The bulk of the SiPho, though, is really it's to go into data center. It's to achieve a 400 Gbps, 800 Gbps capability. The first and foremost customer that we had press released with was Inphi, as far as them being a SiPho customer, and certainly their presence and abilities within having a very high data rate capabilities. It's known.
They were acquired by Marvell. Those are right now the three major areas that we're involved in.
Okay. That's helpful detail, Russell. My last quick question following up another one regarding the Agrate fab. In a prior question, you had answered with a couple of areas of focus here. I'm not sure if those were intended to be the biggest ones in the next, you know, first couple of years out of the gate or the earliest ones, but maybe if you can give us some more color on other areas which you're tending to focus on that capacity.
We really are focusing the initial capacity in those two areas, the RF SOI, several different platforms of RF SOI and stitch field display. That's the initial focus that we have there.
Okay. Perfect. That's all for me. I'll jump on the line. Thank you.
Thank you.
Appreciate it.
The next question is from Mark Lipacis of Jefferies. Please go ahead.
Hi. Thanks for taking my question. I don't know, maybe for Oren, the CapEx that you're putting up and projected to put up, is there, can you quantify for us how this will impact the depreciation line in the cash flow statement and how. If you can't quantify it, perhaps could you give us a framework to think about, you know, the normal depreciation schedule for this CapEx and when you might start depreciating it? Thank you.
Yeah. We, as a rule, depreciate our CapEx equipment tools over 15 years, one five. The CapEx for the Agrate factory, which I mentioned, will be $160 next year and additional $240 in 2023, will not be depreciated before the beginning of 2023. Next year you should see zero from that in depreciation because until the tools will arrive, and then there should be installation and qualification, and it's part of a big chunk of tools that arrive at the same timing. Under the rules, only once we will qualify everything, we will start to depreciate. Usually, it's two to three quarters or even four, up to four quarters after the arrival of the tools. It will not be next year.
You can start modeling it from 2023 in small amounts, I guess, from the middle of 2023. From Q3 of 2023, it will be higher amounts, as we start to ramp. Also, Russell indicated that we will see some revenues from Agrate in his forecast for growth for Q4 2023. Obviously, when there is revenue, there will be also cost and depreciation. That's about the Agrate. This is part. The second part is the regular CapEx. I updated about, I mean, we already announced it in the past. I just gave an update that the $250 million that we already announced, that we ordered this year, will be paid in, you can call it linear payments, linear flows, almost linear from the middle of 2021 to the end of 2022.
Let's say $40 million a quarter. That's when it's paid. Usually depreciation starts one quarter after that. Additional $40 million. I mean, if it's linear, $250 million over six quarters, additional $40 million of CapEx coming into depreciation, but over 15 years, right? It is like 6 million a quarter a year. Each such quarter is additional 6 million of layer. I don't think it will impact much because on the other hand, we also purchased CapEx in the past, maybe a lower amount than that, but still there were. Whenever a new layer of depreciation starts to be amortized, an old layer that finished its depreciation from 15 years ago, that was purchased 15 years ago, terminates. The delta shouldn't be, I believe, material amount.
Of course, you can model it very easily, just add $40 million of new CapEx every quarter.
Gotcha. Thank you, Oren. Very helpful.
Thank you.
There are no further questions at this time. Mr. Ellwanger, would you like to make your concluding statement?
Certainly. Thank you very much. Firstly, really, I'm excited about where we are, what's in front of us, the relationships we've developed with our customers, the markets that we're in, the figures of merits we've been able to achieve that benefit our customers in having differentiated products that as they design to our flows, in an exciting time and in an exciting period for the company. The 15% net profit margin target that I've given for 2022, I think is a good step for the company, and, look forward to achieving it and to, updating as we move forward on the top- line value growth that obviously is very accretive to the bottom line margins.
We've recently issued our first corporate sustainability or ESG report, reviewing the variety of our global activities, providing in-depth information about our sustainability policies, programs, and goals. As a company, we've always had an overriding focus to have a positive impact on society and to minimize any negative impact on our planet and to do what we can to have a positive impact on the planet. We're very proud of our activities. We invite you to read our report. It's available on our website. We have a package that I referred to before the call, or I'm sorry, as I was talking about utilizations, that we'll publish now that the call is ending, that summarizes all of the numbers, highlights, activities, utilizations in the company. Please, as per your interest, look at that. I think it's a complete package.
Lastly, we'll be participating at the 24th Annual Needham Growth Conference on January 10th. We look forward to meeting as many of you as possible during that event, albeit virtually, but still look forward to it very much. With that, I thank you and look forward to updating you as things happen in the company and definitely upon the end of the quarter. Thank you very, very much.
Thank you. This concludes Tower Semiconductor third quarter 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.