Tower confirms Chinese fab project

August 21, 2017 //By Peter Clarke
Tower Semiconductor Ltd. (Migdal Haemek, Israel), which trades as TowerJazz, has confirmed it is in partnership with Chinese investors, Tacoma and Chinese regional authorities to build a 200mm wafer fab in Nanjing, China. Tower has received an initial payment of $18 million.

Tower said that under the terms of its deal it will not invest any money in the construction of the fab but would contribute to the project by way of its technical knowledge and project management skills. Once the wafer fab is in production Tower will be entitled to up to 50 percent of the manufacturing capacity for its own use. The maximum capacity is projected to be 40,000 wafers per month at maximum.

In an earlier story run by eeNews Europe we reported that Tower had invested alongside Tacoma Technology in the creation of an industrial park in Nanjing in Jiangsu province with an intended ultimate budget of $3 billion. That industrial park was set to include one 200mm wafer fab and one 300mm wafer fab – both to be managed by Tower – according to a report from the China unit of the Israel Export Institute dated August 21, 2016 (see Tower in two-fab project in China, say reports). A ground-breaking ceremony for the industrial park held on June 8, 2016.

In its announcement dated August 21, 2017, Tower did not make reference to a 300mm wafer fab, but nor is the possibility excluded. The agreement covering the creation of the 200mm wafer fab is described as phase one of the framework agreement with Tacoma.

Tower said it expects to receive additional payments over the next few years as the project develops and subject to a definitive agreement specifying all the terms and conditions.

Tower said that the project will be fully funded by Tacoma Technology Ltd. and Tacoma (Nanjing) Semiconductor Technology Co. Ltd., Nanjing Economic and Technology Development Zone, Credito Capital and other potential third party investors. Tower stressed that it will therefore gain considerable manufacturing capacity at zero capital cost while meeting the needs of Chinese industry and Chinese government policy to promote indigenous production of ICs.

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