Tower Semiconductor Expedites Production of Mixed-Signal Integrated Circuit for Smart Link

Record Time for Initial Production from Prototyping

MIGDAL HAEMEK & NETANYA, Israel--(BUSINESS WIRE)--Feb. 23, 2004 -- Tower Semiconductor (NASDAQ: TSEM; TASE: TSEM) has launched production of a Coder-Decoder (CODEC) integrated circuit (IC) for Smart Link, Ltd., a leading developer and supplier of modem solutions for the communications industry. With an initial production order released already and forecasted orders of few million dice, this production marks the opportunity for a long term relationship between Tower and Smart Link. Utilizing 0.18-micron, mixed-signal technology in its Fab 2 facility, Tower's prototype process enabled the successful development of Smart Link's SL2800B (Raptor). Tower began producing the SL2800B (Raptor) ICs shortly after prototyping began, utilizing Tower's Shuttle program. Factors essential to the acceleration of production were the simultaneous implementation of the intellectual property (IP) block with the packaging and testing of the first batch of ICs.

Avnet ASIC Israel and Chipidea, participants in Tower's Authorized Design Center program (TADC), helped to achieve first silicon quickly and efficiently. Chipidea provided the mixed signal IP, and Avnet ASIC Israel provided design kits, libraries and other manufacturing tools. Avnet has also integrated the IP and Smart Link logic design and performed Place and Route, Test Vector Generation and Tape Out according to Tower's Design Rules.

"The Smart Link project demonstrates Tower's ability to accelerate the time from project kick-off to production, helping customers achieve exceptional time-to-market," said Danny Hacohen, Tower's vice president of sales for Europe and Asia. "Tower's leadership in mixed-signal execution and close work with its customer and design partners lead to first-time silicon production with maximum efficiency."

"Smart Link benefits greatly from the combined resources of Avnet, ChipIdea and Tower," said Moty Mebel co-founder and CEO of Smart Link "The partnership made the production and verification of our device possible in a quick and highly efficient manner, and we look forward to future projects executed with the same ease and cooperative spirit."

Tower's Authorized Design Center program was launched in September 2003 to help customers accelerate the design-to-silicon process and enhance first-time silicon success. Chipmakers, particularly fabless companies, can augment their own design resources with the specialized design capabilities of Tower-authorized design centers. By working with the design centers, chipmakers can create integrated circuit designs optimized for Tower's manufacturing process technologies. Authorized design centers are capable of designing both complete integrated circuits and embedded IP blocks.

About Tower Semiconductor Ltd.

Tower Semiconductor Ltd. is a pure-play independent wafer foundry established in 1993. The company manufactures integrated circuits with geometries ranging from 1.0 to 0.18 microns; 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 microns and can produce up to 16,000 150mm wafers per month. Fab 2 features 0.18-micron and below process technologies, including foundry-standard technology. When complete, Fab 2 is expected to offer full production capacity of 33,000 200mm wafers per month. The Tower Web site is located at www.towersemi.com.

About Smart Link Ltd.

Smart Link Ltd. is the third largest worldwide developer and supplier of software-based communications products that provide Internet and Broadband access for PC, Set-Top Boxes and internet appliance OEM markets. Smart Link's technology enables it's customers to replace traditional, hardware-based communications products with high-quality, user-friendly software-based solutions that are smaller and less costly. Products include software and chips that are easily integrated into personal computers (PCs) and information appliances. Our products take advantage of the excess computing power of advanced microprocessors to perform required communications tasks. Smart Link maintains offices in Israel, USA, UK, Taiwan and China. For more information, visit www.smlink.com.

Safe Harbor for Tower Semiconductor Ltd.
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) our ability to completely satisfy Smart Link's production orders in Fab 2, (ii) the completion of the equipment installation, technology transfer and ramp-up of production in Fab 2, (iii) having sufficient funds to complete the Fab 2 project, (iv) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, (v) operating our facilities at satisfactory utilization rates, (vi) our ability to capitalize on increases in demand for foundry services, (vii) meeting the conditions to receive Israeli government grants and tax benefits approved for Fab 2 and obtaining the approval of the Israeli Investment Center to extend the five-year investment period under our Fab 2 approved enterprise program and of amendments to our modified business plan, (viii) attracting additional customers, (ix) not receiving orders from our wafer partners and technology providers, (x) failing to maintain and develop our technology processes and services, (xi) competing effectively, (xii) our large amount of debt and our satisfying the covenants set forth in our amended facility agreement, (xiii) achieving acceptable device yields, product performance and delivery times and (xiv) the completion of the documentation for the Siliconix agreement. A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in our most recent Annual Report on Form 20-F and in our Form F-3, as amended, as were filed with the Securities and Exchange Commission and the Israel Securities Authority.

Contact Tower Semiconductor Fill out this form for contacting a Tower Semiconductor representative. Your Name: Your E-mail address: Your Company address: Your Phone Number: Write your message: