Tower Semiconductor Receives $20 Million of Cash Investment From Israel Corp.

January 7, 2009

MIGDAL HAEMEK, Israel, January 7 /PRNewswire-FirstCall/ — Tower
Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), an independent specialty
foundry, today announced a $20 million cash investment in the Company by
Israel Corp, pursuant to the agreement between the parties announced on
September 25, 2008.

According to the terms of the agreement, Israel Corp. has invested $20
for Tower’s equity equivalent capital notes based on a $0.26 value
per share. The equity equivalent capital notes have no voting rights, no
dividend rights, are not tradable, do not carry interest, are not linked to
any index and are not redeemable.

“We are pleased that Israel Corp. continues to show its support of
Tower,” commented Russell Ellwanger, chief executive officer of Tower. “This
additional capital will assist us in continuing our efforts to become the
leading specialty foundry in the world and will provide needed flexibility as
we continue to leverage the synergies inherent in our merger with Jazz
Technologies and streamline our world-wide operations.”

About Tower Semiconductor Ltd.

Tower Semiconductor Ltd. is a pure-play independent specialty wafer
foundry. Tower manufactures integrated circuits with geometries ranging from
1.0 to 0.13-micron; it also provides complementary technical services and
design support. In addition to digital CMOS process technology, Tower offers
advanced mixed-signal & RF-CMOS, Power Management, CMOS image-sensor and
non-volatile memory technologies. Through access to the process portfolio of
its wholly owned subsidiary, Jazz Semiconductor, Tower offers RF CMOS, Analog
CMOS, Silicon and SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage
CMOS. To provide world-class customer service, Tower maintains two
manufacturing facilities in Israel with access to Jazz Semiconductor’s fab in
the U.S. and manufacturing capacity in China through Jazz’s partnerships with
ASMC and HHNEC. For more information, please visit http://www.towersemi.com
and http://www.jazzsemi.com.

Forward Looking Statements

This press release includes forward-looking statements, which are subject
to risks and uncertainties. Actual results, including any expected benefits
and anticipated cost savings, may vary from those projected or implied by
such forward-looking statements and you should not place any undue reliance
on such forward-looking statements. Potential risks and uncertainties
include, without limitation, risks and uncertainties associated with: (i)
maintaining existing customers and attracting additional customers, (ii) not
receiving orders from our wafer partners and customers, which can result in
excess capacity, (iii) the cyclical nature of the semiconductor industry and
the resulting periodic overcapacity, fluctuations in operating results,
future average selling price erosion, (iv) having sufficient funds to satisfy
our short-term and long-term debt obligations and other liabilities, (v)
operating our facilities at high utilization rates which is critical in order
to defray the high level of fixed costs associated with operating a foundry
and reduce our losses, (vi) our ability to satisfy the revised covenants
stipulated in our amended credit facility agreement, (vii) our ability to
capitalize on increases in demand for foundry services, (viii) meeting the
conditions to receive Israeli government grants and tax benefits approved for
Fab2, the possibility of the government requiring us to repay all or a
portion of the grants already received and obtaining the approval of the
Israeli Investment Center for an expansion program, (ix) our ability to
accurately forecast financial performance, which is affected by limited order
backlog and lengthy sales cycles, (x) our merger with Jazz, including
possible delays in the integration process, diversion of management’s
attention, retention of key employees and not realizing anticipated benefits,
(xi) the completion of the equipment installation, technology transfer and
ramp-up of production in Fab 2 and raising the funds therefor, (xii) our
dependence on a relatively small number of products for a significant portion
of our revenue, (xiii) a substantial portion of our revenues being accounted
for by a small number of customers, (xiv) the concentration of our business
in the semiconductor industry, (xv) product returns, (xvi) our ability to
maintain and develop our technology processes and services to keep pace with
new technology, evolving standards, changing customer and end-user
requirements, new product introductions and short product life cycles, (xvii)
competing effectively, (xviii) the large amount of debt and liabilities and
the ability to repay our short-term and long-term debt and liabilities on a
timely basis, (xix) achieving acceptable device yields, product performance
and delivery times, (xx) our ability to manufacture products on a timely
basis and to purchase the equipment to increase Fab2 capacity and timely
installation thereof, (xxi) our dependence on intellectual property rights of
others and our ability to operate our business without infringing others’
intellectual property rights, (xxii) exposure to inflation, currency exchange
and interest rate fluctuations and risks associated with doing business
internationally and in Israel, (xxiii) current global economic downturn, the
prevailing market conditions in the semiconductor industry (including global
decreased demand, downward price pressure, excess inventory and unutilized
capacity) and the lack of availability of funding sources in light of the
prevailing financial markets situation, which may adversely affect the future
financial results and position of the Company, including its ability to
continue to support its operations, (xxii) pending resolution of patent
infringement claim against us, and (xxiii) business interruption due to fire,
the security situation in Israel and other events beyond our control.

A more 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 our business is included under the heading “Risk
Factors” in our 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. Future results may differ materially from those
previously reported. The Company does not intend to update, and expressly
disclaims any obligation to update, the information contained in this release.


    Tower Semiconductor
    Noit Levi, +972-52-457-8266


    Shelton Group
    Ryan Bright, +972-239-5119 ext. 159

SOURCE Tower Semiconductor Ltd

Source: newswire

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