Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE:TSEM) reports that it has completed the acquisition of Micron Technology’s fabrication facility, which is located in Nishiwaki City, Hyogo, Japan.
The company, which markets products under the TowerJazz brand name, said that the acquisition nearly doubles its current manufacturing capacity, raising production potential to 60,000 wafers per month.
Tower said that the expanded capacity will serve the growing needs of its expanding blue chip customer base, and that this combined with the added business potential in Japan, is expected to help position the company in reaching its target of $1 billion annual revenue by 2014.
The company said that the purchase of the Micron facility, including assumption of liabilities, cost about $140 million, of which $40 million was paid in cash, and some 19.7 million Tower ordinary shares. Under a "take-or-pay" supply agreement between the companies, Tower will also manufacture products for Micron in the Japan facility for at least the next three years with processing technology licensed from Micron.
With completion of the acquisition, Tower said that it now has operational facilities worldwide with two fabs in Israel, one fab in the US, and additional capacity available in China through manufacturing partnerships, and the newly acquired fab in Japan. Tower added, "This acquisition enhances the company’s geographic reach and distribution capabilities which TowerJazz believes will create a significant opportunity for revenue enhancement and increased efficiencies in manufacturing."
Tower CEO Russell Ellwanger said, “We are excited about the potential of this acquisition and believe this is an opportunity for us to bring our analog specialty leadership to the next level. This acquisition is an excellent strategic fit for TowerJazz; it sends a clear message to our customers that we are positioned to meet their growing needs.
Tower chairman Amir Elstein said, “The acquisition of a high volume manufacturing facility in Japan was not an opportunistic event, but rather a board approved strategy that the management aggressively pursued and executed upon. I have personally met with the management of the Nishiwaki facility and am most positive that the employee talent and large factory capacity will be seamlessly incorporated into TowerJazz’s global specialty foundry growth and performance leadership.”
Tower said that the facility can support geometries down to 95nm and can also be used to manufacture other products using TowerJazz process technologies. Tower plans to quickly qualify its core power management platforms to serve the substantial growth demand from its Korean customers and then build high end RF capabilities.
Tower's share price was down 1.74% on Nasdaq of Friday to $1.13, giving a market cap of $305.72 million.
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