Tower Semiconductor Signs Technology Transfer and Licensing Agreement With IMEC for Analog Modules and Technologies

MIGDAL HAEMEK, Israel & LEUVEN, Belgium--(BUSINESS WIRE)--January 8, 2002-- Agreement Will Expedite Development of Analog and Mixed-Signal Capabilities at Tower's New Fab 2 in Geometries of 0.18 Micron

Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TOWER) announced today the signing of an agreement with IMEC for the technology transfer and licensing of analog modules and applicable technologies for Tower's Fab 2. The agreement will expedite Tower's development of specialized analog and mixed-signal technologies, applicable in cellular phones, RF, CMOS Image Sensors and similar technologies and will allow Tower to provide such services to its customers at the time of production ramp-up.

"We are pleased to acquire highly advanced analog and mixed-signal technologies from IMEC, which has excellent experience in these areas," said Dr. Itzhak Edrei, Tower's VP of Research and Development. "Tower's research and design teams will integrate the licensed technologies into advanced analog and mixed-signal capabilities which will offer high levels of characterization, thus enabling Fab 2 to offer foundry services to a wider variety of customers and applications." He added, "This transfer is an element of Tower's strategy to integrate added value technologies and features to its baseline of high density CMOS logic technology."

Prof. Gilbert Declerck, President and CEO of IMEC, commented, "IMEC has already successfully collaborated with Tower on the transfer and installation of IMEC's 0.35 micron front-end process. This new agreement builds on this previous successful collaboration."

The agreement and license include Local Salicide modules, MIM capacitors, High Ohmic Poly Resistors, N+ and P+ Medium Ohmic Poly resistors, Inductors and MOS and Bipolar characterization for silicon integrated circuits.

About Tower Semiconductor and Its New Fab

Tower Semiconductor Ltd. is an independent wafer manufacturer, strategically focused on advanced Flash memory and CMOS Image Sensor technologies. Tower provides manufacturing and turnkey services for integrated circuits (IC) on silicon wafers in geometries from 1.0 to 0.35 micron, using its advanced technological capabilities and the proprietary designs of its customers. For additional information regarding Tower, please visit www.towersemi.com.

Tower is now building an advanced fab adjacent to its current facility in Migdal Haemek, Israel. When completed, the new fab, referred to as "Fab 2," will employ approximately 1,000 employees and produce up to 33,000 200-mm wafers per month in geometries of 0.18 micron and below, using advanced CMOS technology from Toshiba.

About IMEC

IMEC was founded in 1984 and today is Europe's leading independent research center for the development and licensing of microelectronics, and enabling information and communication technologies (ICT). IMEC is headquartered in Leuven, Belgium, and has a staff of more than 1100 people including over 350 industrial residents and guest researchers. Its revenue of more than 120 million EURO is derived from agreements and contracts with the Flemish government and companies, the EC, MEDEA, the European Space Agency, equipment and material suppliers and semiconductor companies worldwide. IMEC's activities concentrate on the design of integrated information and communication systems; silicon process technology; silicon technology and device integration; microsystems, components and packaging; solar cells; advanced training in microelectronics. IMEC has a sub-0.25um 200mm pilot line and is ISO9001 certified. News from IMEC is located at www.imec.be.

Safe Harbor

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. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with (i) satisfaction of the conditions under the agreements with the Fab 2 equity and wafer partners, the Israeli Investment Center and Tower's banks, (ii) obtaining additional financing for the Fab 2 project from equity and/or wafer partners, (iii) completing the construction of a new wafer manufacturing facility, (iv) conditions in the market for foundry manufacturing services and in the market for semiconductor products generally, (v) successful completion of the development and/or transfer of advanced CMOS process technologies to be utilized in Tower's existing facility and in Fab 2, (vi) obtaining additional business from new and existing customers, (vii) market acceptance and competitiveness of the products to be manufactured by Tower for customers using these technologies and (viii) ramp-up of production at Fab 2. A more complete discussion of certain risks and uncertainties that may affect the accuracy of these statements, and Tower's business generally, is included at "Item 3. Key Information--Risk Factors" in Tower's most recent Annual Report on Form 20-F and under the caption "Safe Harbor" in Tower's October 31, 2001 third quarter earnings press release included in Tower's report on Form 6-K for the month of October 2001, as filed with the Securities and Exchange Commission.

This press release and prior Tower press releases are available at www.towersemi.com

Contact:
     TOWER SEMICONDUCTOR LTD.
     Tamar Cohen, 011-972-4-650-6998
     pr@towersemi.com
     www.TowerSemi.com