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TowerJazz Announces Completion and Kick-off of its Joint Venture with Panasonic Corporation
|By Business Wire
|April 1, 2014 02:30 AM EDT
TowerJazz, the global specialty foundry leader, today announced the
successful completion and kick-off of the joint venture (JV) with
Panasonic Corporation (First Section of TSE and NSE ticker: 6752).
Within the scope of the JV, Panasonic transferred its semiconductor
manufacturing process and capacity tools of 8 inch and 12 inch wafers at
its Hokuriku factories (Uozu, Tonami and Arai) to the JV, committing to
acquire its products from the JV for a long-term period of at least five
years of volume production. TowerJazz is holding 51% of the shares of
the JV, and its revenues are increased by approximately $400 million per
annum. Panasonic Corporation will be a 49% shareholder of the JV.
The JV will enable TowerJazz to offer its customers capacity of a state
of the art 300mm technology fab including best of class 65nm CMOS image
sensor dark current and quantum efficiency performance and additional
45nm digital technology, and added available capacity of approximately
800,000 wafers per year (8 inch equivalent) in three manufacturing
facilities in Japan. The JV will continue the production of Panasonic's
semiconductor processes as Panasonic's subcontractor as well as seek to
expand operations by leveraging TowerJazz's customers and businesses to
capture out-of-group sales.
In addition, TowerJazz intends to cease the operations of its Nishiwaki
(Japan) facility in the course of restructure and rationalization of its
Japan manufacturing and business plans. This will enable the company to
reduce its annual fixed costs by approximately $130 million per annum.
The company has retained the services of a Japanese outplacement
company, with a history of 95% placement success, to facilitate
continued employment to the remaining employees. Products of key
customers, currently being manufactured at the Nishiwaki facility, will
be transferred into the company's other worldwide factories.
Amir Elstein, TowerJazz Chairman, stated, "I am pleased that we
completed this strategic and momentous business agreement with
Panasonic. The consolidation of our Japanese operations, resulting in
significant reduction in fixed costs with an actual increase in
available capacity and an enhanced technology offering, will strongly
impact the company’s future profitability and shareholder value."
Russell Ellwanger, TowerJazz CEO, commented, "This joint venture and
partnership brings together two leaders – Panasonic, an acknowledged
analog components and systems leader, and TowerJazz, a recognized analog
foundry leader – to create a company that will serve and grow the analog
foundry space as no existing single foundry company can. Over these
months of negotiations and business and operational strategic planning
and alignment, we have gained great respect for the technical capability
and the great personal and corporate character of our Panasonic partner
at all levels with which we've interacted. Already, enabled by this
partnership, additional customers and products have been brought within
the TowerJazz manufacturing umbrella whilst others anxiously await first
Ellwanger further stated: "We greatly appreciate the dedication and
performance of our Nishiwaki employees. It is important to note that our
intention to cease operations of this facility is business and
shareholder value based only, and not a reflection of the quality and
performance of the facility."
As consideration for its 51% equity holding in the JV, TowerJazz issued
to Panasonic 870,454 ordinary shares in the value of approximately $7.5
million, which were calculated based on TowerJazz’s average share price
during the 15 trading days period ended on March 27, 2014. As a result
of holding its ordinary shares, Panasonic will become a minority
stakeholder in TowerJazz, holding approximately 1.8% of TowerJazz
TowerJazz was represented on the transaction by Yigal Arnon & Co. and
DLA Piper law firms.
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), its fully owned
U.S. subsidiary Jazz Semiconductor Inc., and its fully owned
Japanese subsidiary TowerJazz Japan, Ltd., operate collectively under
the brand name TowerJazz, the global specialty foundry leader. TowerJazz
manufactures integrated circuits, offering a broad range of customizable
process technologies including: SiGe, BiCMOS, Mixed-Signal/CMOS, RFCMOS,
CMOS Image Sensor, Power Management (BCD), and MEMS capabilities.
TowerJazz also provides a world-class design enablement platform that
enables a quick and accurate design cycle. In addition, TowerJazz
provides (TOPS) Technology Optimization Process Services to IDMs and
fabless companies that need to expand capacity. TowerJazz offers
multi-fab sourcing with two manufacturing facilities in Israel, one in
the U.S., and one in Japan. For more information, please visit www.towerjazz.com.
Safe Harbor Regarding Forward-Looking Statements
This press release includes forward-looking statements, which are
subject to risks and uncertainties. Actual results may vary from those
projected or implied by such forward-looking statements. A complete
discussion of risks and uncertainties that may affect the accuracy of
forward-looking statements included in this press release or which may
otherwise affect TowerJazz’s business is included under the heading
"Risk Factors" in Tower’s most recent filings on Forms 20-F, F-3, F-4
and 6-K, as were filed with the Securities and Exchange Commission (the
“SEC”) and the Israel Securities Authority and Jazz’s most recent
filings on Forms 10-K and 10-Q, as were filed with the SEC,
respectively. Tower and Jazz do not intend to update, and expressly
disclaim any obligation to update, the information contained in this
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