Tower completes acquisition of Micron

Japanese foundry nearly doubles Israeli firm’s semiconductor production capacity.

By KOBY YESHAYAHOU
Tower Semiconductor Ltd., a specialty foundry that makes semiconductors, has completed the acquisition of Micron Technology’s microchip fabrication facility in Nishiwaki City, Japan, the Israeli company said Sunday.
Tower, which markets products under the TowerJazz brand name, said the acquisition nearly doubles its current manufacturing capacity, raising production potential to 60,000 wafers per month.
The expanded capacity would serve the growing needs of Tower’s expanding blue-chip customer base and, combined with the added business potential in Japan, is expected to help position the company in reaching its target of $1 billion annual revenue by 2014, Tower said.
The purchase of Micron, including assumption of liabilities, cost about $140 million, of which $40m. was paid in cash, and some 19.7 million Tower ordinary shares, it said. Under a “takeor- pay” supply agreement between the companies, Tower will also manufacture products for Micron in the Japan facility for at least the next three years, with processing technology licensed from Micron.
With completion of the acquisition, Tower said it now has operational facilities worldwide, with two fabs in Israel, one fab in the United States, additional capacity available in China through manufacturing partnerships, and the newly acquired fab in Japan.
“This acquisition enhances the company’s geographic reach and distribution capabilities, which TowerJazz believes will create a significant opportunity for revenue enhancement and increased efficiencies in manufacturing,” Tower said in a press statement.
“We are excited about the potential of this acquisition and believe this is an opportunity for us to bring our analog specialty leadership to the next level,” Tower CEO Russell Ellwanger said in the statement. “This acquisition is an excellent strategic fit for TowerJazz; it sends a clear message to our customers that we are positioned to meet their growing needs.”
Tower chairman Amir Elstein said: “The acquisition of a high-volume manufacturing facility in Japan was not an opportunistic event, but rather a boardapproved strategy that the management aggressively pursued and executed upon.
I have personally met with the management of the Nishiwaki facility and am most positive that the employee talent and large factory capacity will be seamlessly incorporated into TowerJazz’s global specialty foundry growth and performance leadership.”
Tower said the facility could support geometries down to 95 nanometers in size and can also be used to manufacture other products using TowerJazz process technologies.
Tower said it plans to quickly qualify its core powermanagement platforms to serve the substantial growth demand from its Korean customers and then build highend radio-frequency (RF) capabilities.
Tower’s share price was down 1.74 percent on Nasdaq of Friday to $1.13, giving it a market cap of $305.72m.