Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE:TSEM) today reported that it has signed a major agreement with STMicroelectronics top share a new fab that has just been built in Italy, and which will triple Tower's 300 mm production capacity.
Under the terms of the agreement, Tower will share STMicroelectronics plant, which it began building in 2018 on its Agrante Brianza site in Italy, and which will be ready for production operations in the second half of 2022.
Tower will be required to invest over $500 million in equipment for the fab including $100 million over the coming year, according to the agreement. But when fully operational, the fab will yield annual revenue of $350-500 million. Tower's share price reacted positively to the announcement and is rising sharply on the TASE.
ST and Tower will share the clean room space and the facility infrastructure. Both companies will invest in their respective process equipment and work together on the acceleration of the fab qualification and subsequent ramp-up. Operations will continue to be managed by ST, with select Tower personnel seconded to ST in specific roles to support fab qualification and volume ramp-up, as well as other engineering and process roles. In the early stage 130, 90 and 65nm processes for smart power, analog mixed signal and RF processes will be qualified in R3. The products in these technologies will be used in automotive, industrial and personal electronics applications.
Tower SVP & General Manager of the CMOS Image Sensor Business Unit Avi Strum told "Globes," "We have said for a long time that we are looking to enlarge our production capacity in order to supply demand and that was before the huge demand this year and at the moment. There were all sorts of opportunities that didn't work out and this opportunity was fantastic because ST began the project in 2018 and the building has already been constructed. Now we are starting to put in the equipment and that is moving forward very nicely. The problem in building a fab from scratch is that it takes three years from making the decision to build and until you begin producing revenue from it. We sought shorter time scales and this fitted us like a glove."
He explained that ST's interest was to fill the fab as quickly as possible in order to reach profitability. "If we take part of the capacity then the fab will be full almost from the start and both sides will earn money from lower costs per wafer. It's a win-win situation."
Tower CEO, Russell Ellwanger said, "We are very pleased to announce this partnership with STMicroelectronics. ST is well known for its leading technology, operational excellence, and corporate integrity. We look forward to our mutual success. Tower’s strong execution in advanced 65nm, 300mm based analog RF, power platforms, displays and other technologies, will be significantly enhanced by this activity in Agrate; more than tripling Tower’s 300mm foundry capacity to well service our customers’ increasing demand within these fast-growing markets."
Published by Globes, Israel business news - en.globes.co.il - on June 24, 2021
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