Tower Semiconductor Begins Production of Zoran's Demodulator Chip for Digital Broadcast Televisions and Set-Top Boxes

Tightly Coupled Design and Manufacturing Achieve Superior Performance

MIGDAL HAEMEK, Israel -- Jan. 3, 2006 -- Tower Semiconductor, Ltd., a pure-play independent specialty wafer foundry (Nasdaq: TSEM; TASE: TSEM) today announced that it has begun manufacturing Zoran Corporation's Cascade2 demodulator chip at Tower's FAB2, using 0.18- micron process.

The Cascade2 demodulator is a component in Zoran's Digital TV platform solution, aimed at the transition of the United States market from the NTSC TV broadcasting standards to the digital television (DTV) standard propagated by the Advanced Television System Committee (ATSC).

Industry analysts estimate that worldwide shipments of digital televisions will increase to over 160 million units in 2009, while the US shipments will exceed 60 million units.

"With Tower's 0.18-micron process, our Cascade2 demodulator achieved excellent product performance. Zoran's digital TV enabled products provide consumers with a DVD-class video and audio experience far superior to what they are receiving today on their analog TV sets," said Ram Ofir, senior vice president and general manager, DTV division at Zoran.

"We found Tower's customer support from design to production to be highly responsive, which is important to delivering products quickly in this fast growing market" said Tzach Hadas, vice president operations at Zoran.

"We are pleased to complement Zoran's expertise in digital TV solutions with our process offering that supports bringing intricate digital functionality to the market at affordable prices," said Dani Ashkenazi, General Manager of CMOS product line at Tower. "We take pride in supporting customers such as Zoran with very fast ramps to volume production."

About Tower Semiconductor Ltd.

Tower Semiconductor Ltd. is a pure-play independent specialty wafer foundry established in 1993. The company manufactures integrated circuits with geometries ranging from 1.0 to 0.13 micron; it also provides complementary technical services and design support. In addition to digital CMOS process technology, Tower offers advanced non-volatile memory solutions, mixed-signal and CMOS image-sensor technologies. To provide world-class customer service, the company maintains two manufacturing facilities: Fab 1 has process technologies from 1.0 to 0.35 micron and can produce up to 16,000 150mm wafers per month. Fab 2 features 0.18-micron and below standard and specialized process technologies, and has the current capacity of up to 15,000 200mm wafers per month. Tower's Web site is located at http://www.towersemi.com .