Tower Semiconductor has already received $112 million of the grant. The Investment Promotion Center asked the Investment Development Bank to re-evaluate the grant to the company.
The $250 million grant given to Tower Semiconductor (Nasdaq: TSEM; TASE:TSEM) for building Fab 2 was not worthwhile, states an Industrial Development Bank of Israel report to the Investment Promotion Center of the Ministry of Industry, Trade and Labor. Investment Center director-general Shmuel Mordechai has therefore asked the bank to prepare a new report on the basis of new criteria that would increase the chances that further grants to Tower Semiconductor will be approved.
Three years ago, the Investment Promotion Center approved a $250 million grant to Tower Semiconductor to build its Fab 2 for 0.18-micron chips in Migdal Ha'Emek. Total investment in the plant is $1.5 billion, of which $750 million has already been injected by the shareholders.
In the new report, which will be released in full next week, the Investment Development Bank examined the cost to the economy in the event that the rest of the grants is not transferred to Tower Semiconductor, taking into account that $112 million has already been transferred.
The report found that the two-year delay in the fab's construction; the drop in expected revenue; and the delay in the switch to the new production stages, compared with the original plan that was the basis for the grant's approval all made the grant economically not worthwhile to the economy.
Published by Globes [online] - www.globes.co.il - on November 9, 2003