(Globes (Tel Aviv) Via Acquire Media NewsEdge) April 01--The joint venture between specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) and Panasonic Corporation (TSE: 6752) has gotten underway. Tower owns 51% of the joint venture, which will boost its annual revenue by $400 million. Panasonic acquired 1.8% of Tower, worth $7.5 million, as part of the agreement.
Tower's share price rose 3.9% on the TASE, following the announcement, to NIS 32.12. The share price rose 3.2% on Nasdaq on Monday to $9.14, giving a market cap of $437 million.
Panasonic transferred its semiconductor manufacturing process and capacity tools of 8 inch and 12 inch wafers at its Hokuriku factories to the joint venture, committing to acquire its products from the joint venture for a long-term period of at least five years of volume production. At the same time, Tower will close its Nishiwaki fab as part of its restructuring of its manufacturing and business plans in Japan, which will save $130 million in annual fixed costs. Tower will transfer the production of customers' products to other fabs around the world.
The joint venture will enable Tower to offer its customers the capacity of a state-of-the-art 300mm technology fab, including best of class 65nm CMOS image sensor dark current and quantum efficiency performance and additional 45nm digital technology, and boost capacity by 800,000 wafers per year (8-inch equivalent) at three fabs in Japan. The joint venture will continue the production of Panasonic's semiconductor processes as Panasonic's subcontractor as well as seek to expand operations by leveraging Tower's customers and businesses to capture out-of-group sales.
"This joint venture and partnership brings together two leaders Panasonic, an acknowledged analog components and systems leader, and Tower, a recognized analog foundry leader, to create a company that will serve and grow the analog foundry space as no existing single foundry company can," said Tower CEO Russell Ellwanger. "Additional customers and products have been brought within the TowerJazz manufacturing umbrella whilst others anxiously await first engagements."
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