Tower takes revenue hit in Panasonic extension

March 26, 2019 //By Peter Clarke
Tower takes revenue hit in Panasonic extension
Foundry chip company Tower Semiconductor Ltd. (Migdal Haemek, Israel), which trades as TowerJazz, is going to see a reduction in revenue of US$80 million per year from a three-year extension to its deal to supply Panasonic Semiconductor out of three manufacturing facilities in Japan.

The fabs are owned by TowerJazz Panasonic Semiconductor Co. (TPSCo), a joint venture owned 51 percent by Tower and 49 percent by Panasonic Semiconductor Solutions. The venture was created late in 2013 to allow Tower to take control of three Panasonic wafer fabs (see Tower buys three wafer fabs for $8 million ).

Under the recently signed agreement the wafer loading assigned to Panasonic is expected to remain at a similar level to that in the past but at a new pricing structure that will result in revenue reductions of about US$20 million per quarter, Tower said.

The revenue and margins targeted are expected to be compensated through efficiencies and cost reduction activities, third-party revenue growth including a strong 300mm utilization ramp. The ownership of the joint venture will continue as it has been with Tower owning 51 percent and Panasonic owning 49 percent.

"Our TPSCo employee base has strong technical expertise and pristine operational execution, with over 180 foundry customers having been introduced into TPSCo, which is presently realizing a strong ramp in 300mm state of the art RF, power management and CMOS imaging flows," said  Russell Ellwanger, CEO of TowerJazz CEO and chairman of TPSCo, in a statement. "This has been and continues to be a winning equation for all involved."

Through TPSCo, TowerJazz offers its customers advanced 300mm analog technology manufacturing platforms such as CMOS image sensors, RFSOI 65nm and bipolar-CMOS-DMOS (BCD) power management, all at 65nm.

Related links and articles:

www.towersemi.com

News articles:

Tower buys three wafer fabs for $8 million

TSMC loses market share in top ten foundry ranking

India will get chip industry, says Tower CEO


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