May 9 (Reuters) - Israeli contract chipmaker Tower

Semiconductor beat quarterly profit and revenue

estimates on Thursday and said it expects improvement throughout

2024 despite weak demand for industrial and automotive chips due

to an economic downturn.

Tower, which specialises in analogue chips used in cars,

medical sensors and power management, said it earned 46 cents

per diluted share excluding one-off items in the first quarter

of 2024, versus 55 cents a year earlier.

Revenue slipped to $327 million from $356 million.

Tower was forecast to earn an adjusted 39 cents a share on

revenue of $324.5 million, LSEG data showed.

"Everyone is down year over year. It's a weak market," chief

executive Russell Ellwanger told Reuters, citing large declines

in demand for power management and auto chips.

"For several of the activities we have, we see the first

quarter as having been a low, with some growth coming up beyond

that," he added.

Ellwanger noted that auto sales are down as a function of

the economy but that in other areas, such as data centres,

customers have scaled back chip purchases since they previously

overbought and now have large inventories.

But Tower still needed to boost production capacity, he

said, adding: "There is a lot of uncertainty in the world right

now. Whenever there's uncertainty, consumer buying drops".

Over the past few quarters, semiconductor firms have been

focused on clearing excess inventory mainly in the automotive

industry, hitting firms like Tower which makes analogue,

mixed-signal chips and sensor technologies.

French-Italian firm STMicroelectronics is one of

the latest chipmakers to lower its full-year guidance due to

declining orders.

Ellwanger said Israel's war with Palestinian Hamas militants

was not having a material impact on Tower, which expects

second-quarter revenue of $350 million, with an upward or

downward range of 5%, above analysts' forecasts of $334.8

million.

He said that Tower sees more than 7% sequential growth for

the second quarter and then "notable growth" in the third and

fourth.

Its Tel Aviv-listed shares were up 4.7% in afternoon

trading.