Israeli chipmaker Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), which markets as TowerJazz and Tacoma (Nanjing) Semiconductor Technology Co. Ltd announced today that Tower has received a first payment of $18 million net. The payment renders phase one of the framework agreement between Tower and Tacoma binding.
The two companies are founding a new 8-inch semiconductor fabrication facility in Nanjing, China. Tower will provide technological expertise together with operational and integration consultation, for further payments based on milestones during the next few years, subject to a definitive agreement specifying all terms and conditions.
Tower will also be entitled to capacity allocation of up to 50% of the targeted 40,000 wafer per month fab capacity, which it may decide to use at its discretion. This capacity will provide Tower with additional manufacturing capability and flexibility to address its growing global demand.
Tacoma will be responsible to source funds for all activities, milestones and deliverables of the entire project, including the construction, commissioning and ramp of this facility, with the project being fully supported by Nanjing Economic and Technology Development Zone through its Administration Committee, Credito Capital as well as through potential funding from other third party investors and entities.
Tower president Dr. Itzhak Edrei said, "This agreement with Tacoma is in line with our business strategy to focus on growing markets such as China. The fabless business in China has grown rapidly in the past years. The new 8-inch fabrication facility in Nanjing will provide us with a strategic footprint in China and the opportunity to extend our offerings in advanced specialty process technologies by enabling customers in China to optimize their product performance and time to market."
TowerJazz CEO Russell Ellwanger said, ”We are exploring multiple opportunities in China, and determined this agreement with Tacoma to be a good fit for TowerJazz, providing a roadmap for a meaningful long-term strategic partnership. China's focus to develop its domestic semiconductor industry with full infrastructure presents additional opportunities for TowerJazz, as a global analog leader, to expand our served markets and geographic presence. This partnership will enable us to further fulfill our customers’ needs through additional available capacity as well as to be an active player in the growing Chinese market.”
Tacoma chairman Joseph Lee said, “Deeply engraved in the corporate culture of both Tacoma and TowerJazz is the core belief in working ‘SMART’ with ‘PASSION.’ Our people are committed to contributing to our business partners, the global semiconductor industry and society with the best endeavor and integrity. Tacoma will fully fund this project together with Credito Capital and other entities. This venture will become a dominant player in Asia and will raise the standard in the semiconductor industry to another level.”
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2017
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