NASDAQ & TASE: TSEM
2015 ANNUAL REPORT
www.towerjazz.com
In 2015, TowerJazz presented record
business and financial results while
driving customers’ success.
Moving into 2016, we continue
with a strong outlook for
company growth through a
commitment to performance
and manufacturing excellence.
LETTERS TO SHAREHOLDERS
2 Chairman of the Board
3 Chief Executive Officer
COMPANY OVERVIEW
4 Executive Management
6 TowerJazz Highlights
7 Company Overview
8 History
9 Vision, Mission and Values
10 Financial Overview
12 Operations Overview
14 TPSCo (TowerJazz Panasonic Semiconductor Co.)
16 Fastest Growing Foundry
TECHNOLOGY PORTFOLIO
17 Core Business Units
18 RF/HPA (Radio Frequency/High Performance Analog)
20 CIS (CMOS Image Sensor)
22 Power Management
24
IoT (Internet of Things)
25 Megatrends and Semiconductor Implications
26 Aerospace & Defense
27 MS/CMOS (Mixed-Signal CMOS)
28 TOPS™ (Process Services)
29 Design Enablement
30 Research & Development
31
COMMUNITY CONTRIBUTION
32
FINANCIAL RESULTS
41
CONTACT INFO
1
Dear Shareholders,
I would like to open by
congratulating the entire team
– both management, as well as
our worldwide employee base,
for their outstanding performance
and contribution in 2015, bringing us
another record year at TowerJazz. Our strong results
very much demonstrate the fruits of our efforts to drive
increased shareholder value.
2015 was a noteworthy year, presenting continuous
increase in revenues and profitability, and even more
important, setting the stage for future growth by adding
significant manufacturing capacity and advanced leading
technological offerings, in order to better serve our
customers. Our stated vision is to be the world leader in
specialty foundry solutions. With a strong and growing
customer base, which includes long term tier-1 partners
and with meaningful activities fueling our design wins
pipeline, I believe that in 2015 we have extended that lead
significantly.
We are successfully delivering on our strategy to build
an increasingly profitable, fast growing and world leading
specialty semiconductor foundry. We continuously focus
on creating added value to our customers while setting
both business and financial goals, aiming to reach new
heights each and every year.
I very much look forward to the journey ahead continuing
our strong performance in 2016 and beyond.
I would like to thank you for placing your trust in TowerJazz.
Sincerely,
Amir Elstein
Chairman of the Board
BOARD of DIRECTORS
Amir Elstein Chairman of the Board
Ilan Flato Chairman of the Compensation Committee
Dana Gross Director
Rami Guzman Director
Kalman Kaufman Director
Alex Kornhauser Chairman of the Audit Committee
2
Dear Shareholders,
There is a set of principles that define and produce fulfillment,
achievement and security, or in other words, which produce success.
These principles can be distilled into two groupings: vision and
staffing. An initial vision defines the required staffing. A correct staffing
enables the initial vision, and equally important, gives input for the vision
to evolve. As the vision evolves, the staffing may be refined. This cycle should continue throughout
the “lifetime” of the company. When properly executed there is not a “cradle to grave” lifeline, but
rather a continual “cradle to cradle” of the many segments which comprise a healthy and growing
business.
Ten years ago some of the present management joined together and created a vision for Tower.
It was to become the “specialty foundry leader” while setting two short term goals to enable this,
namely (1) positive EBITDA within the next two quarters, and (2) positive cash from operations
within the next six quarters. The tactics focused on organizing (staffing) the company to capitalize
on customer wins based mainly on existing technologies to drive fast growth. These targets were
achieved. We also, of greatest strategic importance, acquired Jazz Technologies and became
“TowerJazz.” Together we refined our vision to focus on analog solutions and we set a new target
—to achieve $500 million of annual revenues in 2010. We changed our tactics to develop leading
edge analog offerings and to gain first tier customers. We achieved this and became the number one
analog specialty foundry by revenue.
The last five years focused on the same vision with four strong targets: (1) one billion dollar annual
revenue run rate in 2015; (2) achieve a model for sustainable and growing GAAP net profit; (3)
grow our manufacturing capacity in order to facilitate an increase in maximum potential from $550
million to beyond $1.5 billion of annual revenues; and (4) do this in a manner where we strengthen
our balance sheet and reduce our debt. We changed our tactics again. Firstly, we thought it critical
to align with first tier customers to develop multiple generation analog roadmaps, and secondly to
enter into win-win long term contracts with integrated device makers and with system makers to
acquire capacity at reasonably low cost and with guaranteed multi-year utilization levels.
We achieved this! The operational and business targets were realized while reducing our debt by
at least $200 million, achieving a net debt to EBITDA ratio of below 0.4, and comprehensively
strengthening our balance sheet.
We enter 2016 with the “full wind filling our sails” fueled by a year of foundry leadership with year
over year overall growth of 16% and organic growth of 27% (excluding Panasonic and Micron).
We have operational capacity at hand to enable approximately $1.5 billion in revenue, for which
most of the running cost is covered in the current $1 billion annual run rate cost model. Our vision
is to maintain our “leading analog foundry” position, and our tactics are to capitalize and further
refine our offerings which serve the three mega trends that drive the IoT; namely “green everything,”
“seamless connectivity,” and “smart systems.” As we begin our second decade as a management
team, we are leading a company with a strong financial, operational and technological framework,
sustained by substantial customer demand and order backlog.
We thank you for joining us on the journey of the last ten years. We are truly thrilled to share with you
the successes we have achieved by taking on and meeting big targets and challenges. It is with the
dedication of our staff, at every level, who possess the proper knowledge, skills and attitude that our
vision is realized and continues to evolve.
Sincerely,
Russell Ellwanger
TowerJazz Chief Executive Officer &
TPSCo Chairman of the Board
3
MANAGEMENT
TEAM
With many decades of semiconductor industry experience, the TowerJazz management
team is well-positioned to serve fabless companies and IDMs. By listening to our customers’
needs and attracting the best global talent to serve them, we enable quick time to market
for their innovative products.
MR. RUSSELL ELLWANGER
Chief Executive Officer
Chairman, TPSCo
DR. ITZHAK EDREI
President
MR. RAFI MOR
Chief Operating Officer
MR. OREN SHIRAZI
Chief Financial Officer
Senior Vice President of
Finance
MRS. DALIT DAHAN
Senior Vice President of Human
Resources and Information
Technology
MRS. NATI SOMEKH
Senior Vice President, Chief
Legal Officer and Corporate
Secretary
MR. YOSSI NETZER
Senior Vice President of
Corporate Planning
MR. ILAN RABINOVICH
Vice President of Quality and
Reliability and Vice President of
Customer Support
4
EXECUTIVE BUSINESS
& SALES TEAM
BUSINESS UNIT GENERAL MANAGERS
DR. MARCO RACANELLI
Senior Vice President and
General Manager of RF/
High Performance Analog
and Power Business
Groups
General Manager of US
Aerospace & Defense
Business Group, Newport
Beach Site Manager
DR. AVI STRUM
Senior Vice President and
General Manager, CMOS
Image Sensor Business
Unit
MR. SHIMON
GREENBERG
Vice President of Mixed-
Signal/CMOS Business
Unit
MRS. ZMIRA
SHTERNFELD-LAVIE
Senior Vice President of
Process Engineering R&D
MR. ORI GALZUR
Vice President of VLSI
Design Center and Design
Enablement
General Manager of
Transfer, Optimization
and Development Process
Services Business Unit
(TOPS™)
SALES EXECUTIVES
MR. GARY SAUNDERS
Senior Vice President
of Worldwide Sales
& General Manager,
TowerUSA
MR. TODD MAHLEN
Vice President of Asia
Pacific Sales and China
Business Development
MR. DANI ASHKENAZI
Vice President of Sales for
Israel & Europe and Vice
President of Customer
Solutions
MR. MICHAEL SONG
Vice President of
Sales and President of
TowerJazz Korea
MR. FRA DRUMM
Vice President of Business
Development, USA
5
TOWERJAZZ
HIGHLIGHTS
6
2015 record revenues of $961 million with
strong margins and sustainable model for
growing net profit
Seven worldwide manufacturing
facilities providing dual-sourcing
capabilities with available capacity of
over 2.3 million wafers per year
Widest range of advanced specialty
analog technology offerings
Over 300 customers with a continually
growing customer base
Over 4,500 worldwide employees
TOWERJAZZ: THE GLOBAL SPECIALTY FOUNDRY LEADER
CORPORATE OVERVIEW
TowerJazz (NASDAQ/ TASE: TSEM), the global specialty foundry leader, specializes in
analog integrated circuits manufacturing for more than 300 customers worldwide in growing
markets such as automotive, medical, industrial, consumer and aerospace and defense,
among others.
TowerJazz offers a broad range of customizable and
advanced process analog technologies for a variety of
applications. SiGe BiCMOS and RF CMOS are offered for
radio frequency and high performance analog (RF/HPA)
applications used in mobile devices, data communications
systems and automotive radar. TowerJazz provides
CMOS image sensor (CIS) technology to manufacture
optical sensors used in high-end cameras, digital imaging
for medical and dental X-ray, automotive cameras, and
others. In addition, TowerJazz offers a power management
platform to improve battery life for smartphones, tablets
and wearables, as well as for LED lighting solutions
and motor drivers for various products such as drones,
power tools and batteries for automotive. TowerJazz
also provides mixed-signal/CMOS technology to offer
solutions for various types of controllers, analog switches
and audio needs as well as applications for the Internet of
Things (IoT).
To complement its sophisticated technology offerings,
TowerJazz provides a world-class design enablement
platform rendering a quick and accurate design cycle.
TowerJazz also provides
transfer, optimization and
development process services (TOPS™) to IDMs as well
as fabless companies that need to expand capacity, or
progress from an R&D line to a production line. For on-shore
aerospace and defense customers in the U.S., TowerJazz
offers a wide range of technologies for applications
including Large Die ROICs, MEMS and millimeter wave
devices, among others. In addition, TowerJazz provides
“Trusted” foundry services in its Newport Beach, California
facility through its subsidiary, Jazz Semiconductor Trusted
Foundry (JSTF), as accredited by the U.S. Department of
Defense.
Deeply rooted in proven technologies, the company
continues to drive innovation within silicon rather than
by pure technological nodal shrinkage and specializes in
customized analog solutions for differentiated products.
As the global specialty foundry leader in technology
and manufacturing, TowerJazz pursues excellence in all
aspects of its business by maintaining industry expertise
and cultivating a collective culture of quality, innovation,
and trust. Working with TowerJazz, customers are
considered valued partners. From initial discussions
outlining requirements to customizing and executing an
optimal solution, TowerJazz experts work closely with
customers every step of the way.
For global capacity assurance, TowerJazz operates seven
manufacturing facilities in three geographic regions,
providing its diversified customer base with over 2.3
million wafers per year: two fabs (150mm and 200mm)
located in Migdal Haemek, Israel, one fab (200mm) located
in Newport Beach, California, one fab (200mm) located
in San Antonio, Texas, and three additional fabs (two
200mm and one 300mm) through TowerJazz Panasonic
Semiconductor Co., Ltd. (TPSCo) located in the Hokuriku
region of Japan.
TowerJazz employs approximately 4,500 employees
worldwide.
As TowerJazz expands its capabilities, manufacturing capacity and global reach,
the company continues to build on its market and technology leadership to
maintain its worldwide leadership position.
7
HISTORY
1993
1994
2000
2001
Tower Semiconductor was
founded with the acquisition
of National Semiconductor’s
150-mm wafer fabrication
facility.
Tower Semiconductor
became a public company.
Shares began to be traded
on NASDAQ (TSEM).
The Worldwide Design
Center was established in
Netanya, Israel.
Tower Semiconductor
shares began to be traded
on Tel Aviv Stock Exchange
(TSEM).
2004
2008
2014
2016
Tower Semiconductor
established an adjacent,
state-of-the-art facility
(Fab 2) in Migdal Haemek
Israel, designed to
operate in geometries of
0.18-micron and below,
using advanced CMOS
technology.
Tower Semiconductor
and Jazz Semiconductor*
merged in a stock for
stock transaction and
the combined companies
officially launched as
TowerJazz. The merger
provided several key
benefits: increased
global capacity, a larger
customer base, a more
comprehensive product
portfolio, and a stronger
financial base.
TowerJazz acquired Maxim
Integrated’s 8-inch wafer
fabrication facility in San
Antonio, Texas, U.S.,
in order to support its
strong customer demand
and to enable additional
manufacturing flexibility. The
acquisition cost-effectively
increased production by
approximately 28,000 wafers
per month.
TowerJazz completed a
joint venture with Panasonic
Corporation enabling
TowerJazz to offer its
customers state of the
art 300mm technology
including best of class
65nm CMOS image sensor
dark current and quantum
efficiency performance
and additional 45nm digital
technology, adding available
capacity of approximately
800,000 wafers per year
(8” equivalent) in three
manufacturing facilities in
Japan; one 300mm and two
200mm.
* Jazz Semiconductor was formed in 2002 as a spinoff of Conexant Systems, a fabless semiconductor company that spun-off from Rockwell Semiconductor in 1999.
Jazz inherited the Newport Beach, California 200mm fabrication facility and the company’s legacy including the establishment of industry leading SiGe, BiCMOS and
MEMS technologies and the cultivation of a strong design support organization. In addition, Jazz expanded upon its heritage for on-shore, specialized foundry services
focused on the Aerospace and Defense industry.
8
VISION
MISSION
&VALUES
AT the COMPANY CORE
TowerJazz’s vision is to be the world leader in specialty foundry
solutions as measured by our customers, employees and investors.
TowerJazz’s mission is to bring to market specialty foundry solutions
that provide unique value to our customers by attentively listening to and
proactively providing for their needs, through attracting and retaining the
best global talent to serve them.
COMPANY VALUES
Embrace a customer centric
mentality
Foster a culture built on mutual
trust and respect
Demand quality and excellence
in everything we do
Exemplify a data driven and
results-oriented mindset
Focus on the right knowledge,
skills and attitude
Emphasize collaboration
and innovation
9
FINANCIAL
OVERVIEW
RECORD REVENUE
FOR THE FULL YEAR
$961 million
(16% YoY growth)
2015 was a record year from a financial standpoint for TowerJazz, with the Company
breaking records in almost every parameter. With constant growth throughout the
year, and while continuously strengthening the company’s margins and balance sheet,
TowerJazz was able to create a strong foundation for the company to pursue its goals
for the future.
2015 revenues grew to $961 million, 16% over those of last
year, with $254.6 million in the fourth quarter of 2015.
MAIN FINANCIAL PARAMETERS
Fourth quarter 2015 resulted in $75.5 million quarterly
EBITDA, $64.5 million quarterly gross profit, $22.1 million
quarterly net profit and $53.2 million quarterly positive cash
from operating activities.
TowerJazz greatly strengthened its balance sheet with a cash
increase to $206 million, net as well as shareholders’ equity
nearly doubling year over year, coupled with debt reduction
from $318 million to $105 million and current ratio (defined
as current assets ratio to short-term liabilities) increasing
from 1.3X to 2.1X.
The company’s solid performance in 2015, combined with
a substantial increase in gross and operating margins,
demonstrates the operating leverage TowerJazz has in
its business model where the company has relatively
small variable costs. With that, TowerJazz has reached a
sustainable model for growing net profit and overall margins.
TowerJazz’s commitment to answer the strong demand of
its growing customer base was supported during the year
by additional capacity investments and by the new Texas
manufacturing facility acquisition; both increased the
company’s worldwide manufacturing capacity, capabilities
and flexibility.
IN $ MILLIONS:
Revenue
Gross profit
EBITDA
Net profit
2015 2014
961
828
205
64
248
154
(30)
4
Net profit excluding non-recurring items *
51
(88)
Cash & short-term deposits
Current ratio
Gross Debt
Net Debt
206
187
2.1X
1.3X
311
505
105
318
* Non-recurring items included: (i) for FY’15, $81 million non-cash
financing expenses related to bonds F accelerated conversion effect on
non-cash financing costs (ii) for FY’14, $166 million TPSCO acquisition
gain, net, $56 million Nishiwaki cessation relates costs, net and $18
million non-cash financing expenses related to bonds F accelerated
conversion effect on non-cash financing.
SUBSTANTIAL MARGINS INCREASE
STRONG BALANCE SHEET
and FINANCIAL RATIOS
• GAAP gross profit of $205 million (more than 3X
as compared to 2014), with $258 million run rate
based on Q4’15 results
• Increased cash and short-term deposits to $206
million, Vs $187 million in December 2014 and Vs
$155 million in September 2015
• Record EBIDTA of $249 million (62% YoY increase),
with $302 million run rate based on Q4’15 results
• GAAP net profit since the second quarter of 2015
• From $7.8 million in Q2’15 to $13.6 million in
Q3’15 and to $22.1 million in Q4’15
• Established sustainable net profits business
and financial model
• Forward
looking business model of profit
margin growth utilizing cost covered available
the continued high
capacity
customer demand
to support
10
• Generated $195 million positive cash
from
operations, net of $12 million interest payments
(excluding $25 million non-recurring Nishiwaki
cessation employee termination related payment)
• Reduced net debt to $105 million (vs. $318 million
as of Dec’ 2014)
• Reduced net debt/EBITDA ratio from > 3.5X in
Q1’14 to current < 0.4X
• Current ratio of 2.1X as of Dec’ 31, 2015 Vs. 1.3X
as of Dec’ 2014
“We are very pleased with the financial success of the company this past year, and as we move through 2016,
we believe that TowerJazz is better positioned than it has ever been in its history. We have the balance sheet
strength, financial flexibility and global manufacturing capacity to capitalize on all opportunities ahead.”
Mr. Oren Shirazi
Chief Financial Officer
Senior Vice President of Finance
11
OPERATIONS
MANUFACTURING EXCELLENCE
Across the entire organization, the main focus for TowerJazz is to maintain a high
standard of manufacturing quality and outstanding customer service to support all of its
customers’ needs.
As TowerJazz grows and matures its global operations
and presence, the need for flexible and accurate execution
becomes more critical. TowerJazz puts great focus on cross
qualification of its specialized technologies between its
worldwide facilities to provide flexibility to its customers.
is continuously
its operational
TowerJazz
performance, manufacturing quality, and its corporate cost
structure. These activities allow TowerJazz to better serve
improving
its customers and achieve improved financial corporate
performance. At the beginning of 2015, with the demand
outweighing capacity taxonomy, the company invested in
expanding capacity in its existing fabs in Israel and Newport
Beach, California, acquired an additional fab in San Antonio,
Texas, and offloaded major technologies such as power,
CMOS 0.16, and radio frequency silicon-on-insulator (RF
SOI) to TPSCo’s Japan fabs.
EXPANDING MANUFACTURING CAPABILITY
In February 2016, TowerJazz announced the expansion of
its worldwide manufacturing capabilities with the acquisition
of Maxim Integrated’s 8-inch wafer manufacturing plant
in San Antonio, Texas, USA. The availability of additional
capacity will serve TowerJazz’s current and forecasted
strong customer demand, enable additional manufacturing
flexibility and cost-efficiencies, and increase production by
approximately 28,000 wafers per month.
As part of the transaction, the companies have signed
a long-term supply agreement of 15 years, under which
TowerJazz will manufacture products for Maxim in the San
Antonio facility, in quantities which will allow for a gradual
ramp of third party products. TowerJazz has been Maxim’s
supplier for many years and are a trusted partner to manage
Maxim’s proprietary process technology. TowerJazz also
plans to quickly qualify its core specialty technologies in this
facility, including its advanced RF SOI offering, to serve the
substantial growth in demand from its customers.
“Our focus on cross qualification of our core technologies together with our recently acquired capacity enables us to
even further support our ever-growing customer demand.”
Mr. Rafi Mor
Chief Operating Officer
12
WORLDWIDE MANUFACTURING FACILITIES
TowerJazz operates seven manufacturing facilities in three
geographic regions, providing global capacity assurance:
two fabs located in Migdal Haemek, Israel, one fab in Newport
Beach, California, USA, one fab in San Antonio, Texas, USA,
and three additional factories in the Hokuriku region of Japan
through TowerJazz Panasonic Semiconductor Company
(TPSCo), a company established with Panasonic in March
2014.
MIGDAL HAEMEK, ISRAEL
MIGDAL HAEMEK, ISRAEL
NEWPORT BEACH, CA, USA
SAN ANTONIO, TX, USA
• 6" (150mm)
• CMOS, CIS, Power,
Power Discrete
• 1µm to 0.35µm
• Planarized BEOL, W and
Oxide CMP
• 8" (200mm)
• CMOS, CIS, Power, Power
Discrete, MEMS
• 0.18µm to 0.13µm
• Cu and Al BEOL, EPI
193nm Scanner
• 8" (200mm)
• CMOS, CIS, MEMS,
RF Analog
• 0.18µm to 0.13µm
• Al BEOL, SiGe, EPI
• 8" (200mm)
• Power, RF Analog
• 0.18µm
• Al BEOL
ARAI, JAPAN
TONAMI, JAPAN
UOZU, JAPAN
• 8" (200mm)
• Analog, CIS
• 0.13µm to 0.11µm
• Thick Cu RDL
• 8" (200mm)
• Power, Power Discrete,
NVM, CCD
• 0.35µm to 0.15µm
• 12" (300mm)
• CMOS, CIS, RF
• 65nm to 45nm
FOCUS for 2016
2016 will be focused on the integration of
the San Antonio fab into the TowerJazz
family, strengthening of the offloading
between the fabs and balancing the
loading in all the fabs, enabling the
company to increase its overall wafer
shipments
increasing
customer demand.
to serve
the
While keeping the fabs highly loaded,
TowerJazz will continue to focus on
quality, efficiency and cost reduction
projects while answering all of
its
customer needs.
13
TOWERJAZZ PANASONIC
SEMICONDUCTOR CO. (TPSCo)
TPSCo is committed to providing exceptional quality, an environment with high IP
security, and total customer satisfaction through its focused production activity.
TPSCo was established in March 2014 as part of a partnership
with Panasonic; 51% owned by Tower Semiconductor
Ltd. (NASDAQ: TSEM, TASE: TSEM) and 49% owned by
Panasonic. This partnership brings together two leaders in
the semiconductor industry to create a company that serves
to grow the analog foundry space as no existing single
semiconductor foundry can. Through the partnership with
TPSCo, TowerJazz has access to increased capacity at
TPSCo’s three manufacturing facilities in the Hokuriku region
of Japan which have been producing large scale integrated
circuits (ICs) for over 30 years.
TPSCo has developed a robust manufacturing process
based around ISO 9001 and ISO/TS 16949 quality and
automotive management systems, and has produced more
than 500,000,000 ICs for automotive products.
2015 ACHIEVEMENTS & COLLABORATIONS
TPSCo’s market acceptance and associated production
ramp proceeded extremely well in 2015. TPSCo has secured
many more contracts with new 3rd party customers than was
forecasted two years ago and the number of active foundry
customer engagements has surpassed 100 in Q4 2015.
TPSCo has achieved several significant successes
including mass production of multiple high performance
discrete devices for Fairchild Semiconductor targeting
the industrial and consumer markets. As such, TPSCo
became a first tier supplier for Fairchild, and will continue
enhancing its relationship by providing them with the benefit
of both specialty TowerJazz and TPSCo technologies and
capabilities.
Moreover, TPSCo has started mass production for some
important customers, such as Himax imaging, GWS, and
over 20 other customers. These customers came to TPSCo
because they recognize the company’s high quality standards,
and they want to fortify their business continuity plans
by having multiple geographically diverse manufacturing
sites capable of producing TowerJazz compatible devices.
Through close working relationships with its customers,
TPSCo is earning their respect by providing them fabricated
wafers with high quality and delivery standards at a fair price.
In addition, TPSCo has over 100 qualified consumer and
high reliability process flows developed by Panasonic that
are available for its foundry customers. There is strong
interest from TPSCo and TowerJazz customers in several of
the advanced IDM process technologies already qualified in
the Hokuriku Japan facilities.
for
TPSCo has engaged in multiple EDA supplier collaborations
in order to develop a comfortable yet efficient design
environment
its customers. TPSCo has already
announced the collaboration with Synopsys and Keysight
on the development of a new iPDK design environment for
65nm image sensor and 65nm RF CMOS platforms. These
environments allow customers to improve design efficiency
and realize faster design turnaround times and hence faster
time to market for their sample integrated circuit designs.
This gives TPSCo and TowerJazz customers a significant
edge in design wins for end market applications.
TPSCo engineers have developed some of the most
advanced process control schemes for high reliability and
automotive IC manufacturing which enables the company to
achieve higher and more predictable yields.
Finally in 2015, regarding working capital for fabrication
expansion needs, JA Mitsui Leasing granted TPSCo an
additional long-term loan of 8.5 billion Japanese Yen
(approximately $70 million). This decision was made for
several factors which included the strength of the TPSCo
shareholder team, the initial progress achieved by TPSCo in
2015, and the clear growth path for future TPSCo revenue
forecasts. TPSCo believes this agreement enables its growth
and provides seamless expansion to the benefit its existing
as well as new customers.
“2016 is the year that TPSCo truly ‘breaks out’ and establishes itself as a fully operational international specialty
foundry. We are confident that while there will be challenges, there will also be many rewarding times ahead!”
Mr. Guy Eristoff
TPSCo Chief Executive Officer
14
MAIN
APPLICATIONS
TPSCo is focused on providing semiconductor process technology solutions in three
defined areas.
AUTOMOTIVE and HIGH
RELIABILITY PROCESSES
HIGH-END IMAGE SENSORS
(BOTH CIS and CCD)
MOBILE COMMUNICATIONS
PERIPHERAL PROCESSES for
the INTERNET of THINGS (IoT)
LEADING EDGE
PROCESS FLOWS
TPSCo offers leading edge automotive, imaging, RF SOI, power management, embedded
NVM and high voltage discrete process flows for differentiated consumer, automotive and
industrial applications. In 2015, TPSCo continued to transfer and qualify TowerJazz process
technologies in order to offer customers increased capacity and multi-sourcing in three
geographic areas.
RF SOI/RF CMOS SPECIALTY
TECHNOLOGY
POWER MANAGEMENT
SPECIALTY PLATFORM
CMOS IMAGE SENSOR (CIS)
ADVANCED OFFERING
TPSCo is enhancing its 65nm RFCMOS
process in order to be suitable to
run 77GHz mmWave technology for
collision avoidance systems. TPSCo
has also started first silicon on 65nm
RF SOI for a mobile communications
front-end module (FEM) switch.
in
With 35 years of experience
automotive part manufacturing and
many high reliability IDM flows available
to its customers, this is an area of
focus and differentiation for TPSCo.
TPSCo is enhancing this position with
the transfer to TS18PM with Y-flash for
multiple customers including a major
Japanese Tier-1 automotive customer.
TPSCo is widely recognized as one of the
top three image sensor manufacturing
providers worldwide and has provided
many CIS products with extremely
high quality pixels in a very wide range
of end market applications such as
surveillance, automotive, digital still
camera, industrial, and medical.
FOCUS for 2016
TPSCo is actively developing multiple new process flows and
associated devices in order to support its growing customer
base. The Company is developing a high voltage SOI process
that is compatible with the popular and feature rich TowerJazz
TS18PM LDMOS process. This process will enable absolute
LDMOS isolation that is highly preferential for high reliability
applications such as automotive, industrial or medical products.
is planned for release in the middle of this year. It contains 1.2V
logic PDK as well as the PDK for a 2.5V RF-Switch. This PDK will
enable customers to develop integrated LNA & Switch devices
on a platform containing minimum feature size devices of 65nm
that will run in a 300mm processing environment. This process
will be a key enabler for customers to effectively establish
connectivity within the IoT and mobile communications space.
In the imaging space, TPSCo has begun developing an ultra-
sensitive NIR sensor using a novel light collecting technology
that will display much higher contrast in low light applications.
This technology is applicable to various applications in the
image sensor market and will be ready for customer samples
in 2017.
In addition, TPSCo is finalizing a Dual Gate version of its world-
leading sub-90 femto-second RF Switch. The Dual Gate PDK
Mobile communications applications and IoT interconnectivity
are expected to grow rapidly in the next five years. According
to Gartner, there were 4.9B IoT-installed devices in 2015,
and there are projected to be 6.4B devices in 2016,
growing to 20.8B in 2020.
15
THE FASTEST GROWING FOUNDRY
Year over year, TowerJazz is the fastest growing foundry in the world; by providing the
widest range of advanced specialty technologies and working with the industry’s leading
companies in the right growth markets, TowerJazz is well-poised to continue on this path.
16
TOWERJAZZ
CORE BUSINESS UNITS
RF & HIGH
PERFORMANCE
ANALOG
POWER
MANAGEMENT
CMOS IMAGE
SENSOR
MIXED-SIGNAL
CMOS
AEROSPACE
& DEFENSE
TOPS™
Transfer Optimization &
development
Process Services
IMAGE SENSOR
DISCRETE
ANALOG
RF/HPA
NON-VOLATILE
MEMORY (NVM)
POWER
PMIC/BMIC
AUTOMOTIVE &
INDUSTRIAL
“By offering advanced specialty technologies, leading edge design capabilities and world class customer service,
TowerJazz provides complete foundry solutions to our customers enabling them to quickly bring to market their
innovative products.”
Dr. Itzhak Edrei
President
17
RADIO FREQUENCY and
HIGH PERFORMANCE ANALOG
TowerJazz’s SiGe BiCMOS, RF SOI, and RF CMOS technologies enable high-speed and low-
power products in many mobile, consumer, infrastructure, and automotive applications.
(RF) and high performance analog
TowerJazz’s industry leading portfolio of advanced radio
frequency
(HPA)
technologies allow customers to seamlessly and rapidly
integrate many differentiating features into their product
offerings. TowerJazz’s advanced RF and HPA technologies
target the consumer, networking, mobility and automotive
markets. The overall global market includes products
such as smart phones, tablets and other mobile devices,
automotive radar, optical networking, RFID, and many more.
2015 ACHIEVEMENTS & COLLABORATIONS
The RF/HPA business unit has experienced 45% year over
year growth in 2015 with similar growth prospects in 2016
and has become TowerJazz’s largest business unit by
revenue. This growth has been fueled by a combination of
end products such as smartphones and data networks as
well as share gains brought about by technology leadership
in TowerJazz’s flagship radio frequency silicon-on-insulator
(RF SOI) and silicon germanium (SiGe) offering.
In RF SOI, 2015 saw the expansion of TowerJazz’s
manufacturing
footprint with high-volume production
now coming from both its US and Israeli factories across
all production RF SOI and RF CMOS nodes. This allows
capacity for growth and enables unprecedented flexibility
in factory loading as identical technology and parts can be
produced in high-volume from either factory. Also in 2015,
TowerJazz achieved an industry best Ron-Coff figure of
merit for an RF SOI device at sub-90fs from TPSCo’s 300mm
facility in Uozu, Japan.
45% GROWTH
Year Over Year
In SiGe, TowerJazz ramped production
low-noise
amplifiers and began production of a new line of power
amplifiers for smartphones and other mobile platforms. The
company’s high-speed SiGe platform was used for some
of the industry’s most impressive demonstrations such as
UCSD’s 5G 256-element 60GHz phased array transmitter.
in
“The IoT (Internet of Things) is estimated to provide for many billions of connected devices by year 2020. This will
drive mobile data traffic exponentially, requiring high speed and high capacity wireline networks and representing
a major new market for wireless connectivity. TowerJazz’s advanced RF and HPA technologies are well positioned
to catalyze this trend.”
Dr. Marco Racanelli
Senior Vice President & General Manager of RF/High Performance Analog & Power Business Groups
General Manager of US A&D Business Group, Newport Beach Site Manager
NEWS ANNOUNCEMENTS
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
05/14/15—TowerJazz and UCSD
Demonstrate First 5G 256-Element 60 GHz
Silicon Wafer-Scale Phased Array Transmitter
09/02/15—TowerJazz and TPSCo Announce
Breakthrough RF Technology for Next-
Generation 4G LTE Enabled Smartphones
and IoT Applications
18
MAIN APPLICATIONS
The main applications for TowerJazz’s RF/HPA technologies include mobile devices such as
smartphones and IoT terminals, data communication systems and other high frequency markets
such as automotive radar, backhaul communications and emerging 5G wireless.
MOBILE DEVICES
INFRASTRUCTURE
AUTOMOTIVE
In mobile devices such as smartphones
and IoT terminals, RF SOI and SiGe are
used to build switches, power amplifiers,
and low-noise amplifiers in front-end-
modules that receive and transmit wireless
signals. TowerJazz’s RF SOI technology
offers one of the lowest Ron-Coff figure of
merit in the industry at 124fs which helps
customers minimize losses and distortion
improving battery life and boosting data
technology
rates. TowerJazz’s SiGe
offers one of the lowest noise figures in
the industry to improve reception as well
as one of the best power devices in the
market to improve transmission in these
same wireless terminals.
In infrastructure markets, TowerJazz’s
high-speed SiGe technology is used to
build front-end components or other high-
speed wired connections that together
form the backbone of the data network
and enable communication within data
centers and even through fiber-to-the-
home services. Exploding data traffic,
proliferation of data centers and cloud
computing are fueling the growth of
this TowerJazz offering. In addition,
few
foundries offer high-sped SiGe
technology and TowerJazz maintains a
consistent technology leadership offering
transistor speeds of 240GHz and above.
in addition
In the automotive market, TowerJazz’s
SiGe technology is used in collision
avoidance systems
to
wireless communication systems and
GPS. Collision avoidance radar operates
at 24GHz or 77GHz and can take
advantage of the high-speed and low-
noise characteristics of TowerJazz’s SiGe
technology.
FOCUS for 2016
In 2016, TowerJazz anticipates continued growth for both
RF SOI and SiGe primarily driven by smartphone front-end-
modules. To enable this growth, TowerJazz continues to
expand its capacity and has begun transferring RF SOI to a
third TowerJazz factory in San Antonio, Texas (recently acquired
from Maxim).
In addition to adding capacity, the company continues its
aggressive roadmap. In RF SOI, TowerJazz continues to reduce
Ron-Coff by 20% year-over-year providing further benefit to
its customers. In SiGe, TowerJazz continues to reduce noise
and power consumption while increasing speed with its 4th
generation technology (H4).
radar applications.
Today, TowerJazz’s high-speed SiGe is used in network
In
communications and automotive
the future, the company anticipates 5G wireless cellular
transmission to migrate to higher frequencies and enable
higher data-rates in mobile devices. With this future transition,
TowerJazz sees an opportunity to expand the market for its
SiGe technology as it is well suited to operate efficiently at
these higher frequencies relative to competing technology.
19
CMOS IMAGE SENSOR
TECHNOLOGY
TowerJazz’s advanced and proven CMOS image sensor (CIS) technology meets the
growing demand for optical sensors used in high-end photography, industrial, medical,
automotive and consumer applications. The company’s extensive experience in the
imaging field, combined with its own know-how developed in-house, enables best-in-
class customized designs.
According to market research firm, Yole Développement
(January 2015), the CIS market in general is growing in a
CAGR of more than 10% -- however, the areas TowerJazz
plays in, such as security, medical and automotive are
expected to grow at almost twice this pace; this is what
makes CIS a very exciting market to be in.
Unlike other foundries, TowerJazz is not offering just a
superb CIS technology, but offers a pixel tailor-made per
application requirements and customer needs. For example,
TowerJazz provides a very high Dynamic Range (DR) pixel
for high end photography or a very small global shutter (GS)
pixel with very low noise and high shutter efficiency with near
IR sensitivity for 3D gesture sensors. In addition, TowerJazz
continuously develops new pixels and new technologies
such as IS11 on TS18 platform or very small global shutter
pixels on 110nm technology at TPSCo in Arai, Japan.
TowerJazz’s skilled experts support the customization of
pixels per project needs and superior performance (low dark
current, low noise and high dynamic range) enables a rich
offering for various digital imaging applications. TowerJazz
has demonstrated leading CIS technology for high-end
cameras and it is a proven leader in X-ray CMOS image
sensors with the largest market share in the dental field.
TowerJazz’s long-term R&D investment keeps the company
at the cutting edge.
2015 ACHIEVEMENTS & COLLABORATIONS
reaching
In the past year, TowerJazz has developed many new
technologies with some already
the mass
production stage. The first and most important one is the
small global shutter (GS) pixel with Near IR (near infrared)
sensitivity for 3D gesture control applications. The pixels
are true CDS (correlated double sampling) pixels, known as
6T pixels. In parallel, TowerJazz has announced the mass
production start of an advanced IR Sensor for depth sensing
technology for Intel.
TowerJazz also announced a BSI sensor with extremely
good response for UV with Gpixel in China. The BSI activity
has been developed successfully with a partner in Europe
for numerous customers.
In addition, TowerJazz has developed a unique “gated” pixel
for Brightway Vision that is going to be used in the automotive
area as part of the emerging automotive ADAS (automatic
drive assistant systems) market for lane departure warning
and night vision.
TowerJazz is now in the midst of development of a new family
of global shutter pixels in its TPSCo’s Arai, Japan 110nm
fab. The pixels will be smaller with much better shutter
efficiency than currently offered, and the move to the 110nm
technology node will allow dramatic reduction in power
consumption and sensor area for TowerJazz customers’
next generation machine vision sensors.
“ 2015 was a very good year for our CIS business unit. We saw growth in all of the areas we play in—from the machine
vision market that has become very solid in its growth with our customers—through the dental market to the gesture
recognition market, among others.”
Dr. Avi Strum
Senior Vice President & General Manager, CMOS Image Sensor Business Unit
NEWS ANNOUNCEMENTS
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
03/03/15—TowerJazz Begins Mass
Production of Advanced IR Sensor for Depth
Sensing Technology
04/20/15—TowerJazz and Gpixel Announce
the First Backside Illuminated Scientific
CMOS Image Sensor
06/22/15—BrightWay Vision Chooses
TowerJazz for the production of its Gated
Sensor for Automotive Imaging Applications
20
MAIN APPLICATIONS
TowerJazz’s CIS offering is customized
for the application—based on a wide
range of geometries
from 180nm
technology to 65nm technology.
PROFESSIONAL PHOTOGRAPHY
MEDICAL X-RAY
and MLC
Still DSLR
cameras,
cinematography and broadcasting video
cameras
Intra and extra oral dental sensors
(panoramic, cephalographic and dental
CT) as well as medical surgery and NDT
sensors
INDUSTRIAL & HIGH SPEED
AUTOMOTIVE & SECURITY
3D GESTURE CONTROL
For automated factory control, food
industry control, 2D barcode readers,
traffic cameras and many more
High end HD, FHD, SHD and even 4K
sensors for high end high resolution
security. High dynamic range rear, front
and side outside automotive cameras as
well as internal gesture recognition
Time of Flight (ToF) and structured light
sensors for gaming, 3D printing, drones,
augmented reality (AR) and virtual reality
(VR) as well as many more applications
FOCUS for 2016
In 2016, TowerJazz expects to see new products coming
from its TPSCo facility in the high end photography and the
high end security markets, served by the Uozu, Japan 12”
65nm fab, and small pixel (high resolution machine vision
sensors) coming from the 110nm fab in Arai, Japan.
TowerJazz sees significant trends in the future for CIS
technology. One major growth area is in the dental and
medical large sensor market, replacing current image
intensifier tubes and amorphous silicon technologies.
Another area of growth is in the security and automotive
markets, driven by the requirement for cameras at each
street corner and eight to ten cameras per car for a 360
degree view. Last but not least, major growth is expected in
3D gesture control cameras; most laptops will be equipped
with 3D cameras in the future.
21
POWER
MANAGEMENT
Power platforms available at TowerJazz provide wide application coverage from mobile
markets to computer and other consumer markets to automotive and power restricted
wearables.
TowerJazz’s power platform offers maximum flexibility,
enabling customers to create cost-effective products at any
desired level of integration and achieve first-pass success
for faster time-to-market. The integration of Non-Volatile
Memory (NVM) provides significant differentiation and cost
effectiveness for enhanced power management solutions.
The company offers solutions that enable high integration
of the most sophisticated power controls and best in class
efficiency for the always needed higher end-product power
ratings.
The advantages of TowerJazz’s power platform includes its
low Rdson offering which enables the highest efficiencies in
the market, adding smartness to the systems (the ability to
integrate high density logic cores) and the ability to supply
positive and negative voltages in the same part which is
important in wireless charging, audio, automotive and other
applications.
TowerJazz’s industry leading Bipolar-CMOS-DMOS (BCD)
process is used in complex power management chips,
including driver ICs, battery and portable power management,
power control for PCs, Class-D audio amplifiers, and other
consumer, communications and computing applications.
Customizable technology (5V to 80V) provides design
optimization and the lowest die size at any given breakdown
voltage.
2015 ACHIEVEMENTS & COLLABORATIONS
TowerJazz has been expanding its advanced 0.18-micron power
management process (TS18PM) offering 30% improvement in
Rdson which directly translates into efficiency improvement,
lower power consumption, and reduction in size. This platform
targets more than 40% of today’s power market, including
computer, wireless, industrial, and automotive applications.
One of the end applications utilizing TowerJazz’s TS18PM
platform is a touch screen controller which enables special
capabilities of sensing multi-fingers touch and a digital pen
(stylus). Recently, this advanced digital pen technology was
acquired by Microsoft for use with its Surface products.
Source: Microsoft News Center
“Our investment in power technology has begun to pay off this year with a strong ramp of marquee products in Migdal
Haemek, the start of production in our second factory in TPSCo, and a large number of design wins due to our best-in-
class foundry BCD offering providing strong momentum for growth in 2016 and beyond.”
Dr. Marco Racanelli
Senior Vice President & General Manager of RF/High Performance Analog & Power Business Groups
General Manager of US A&D Business Group, Newport Beach Site Manager
NEWS ANNOUNCEMENTS
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
22
07/29/15— TowerJazz Ramps Mass
Production of Touch Screen Controller
Developed by N-trig for Digital Pen
11/17/15—TowerJazz Announces Availability
of its Next-Generation Power Management
Platform Enabling up to 30% Efficiency Boost
and Form Factor Reduction
MAIN APPLICATIONS
TowerJazz power platforms address the market’s need for higher integration, more features and
control, and the constant demand for higher efficiency.
SMARTPHONES, TABLETS and WEARABLES
Primary growing markets for TowerJazz’s power management
technology are wireless charging and portable power in
smartphones, tablets and wearables.
According to market research firm, IHS Technology, the mobile
market is predicted to grow at 6.5% CAGR for mid and high
end handsets over the next three years with TowerJazz’s SAM
(serviceable available market) estimated at $2 billion in wafers.
The demand for power management in mobile devices, though
constantly growing, must continuously improve power usage
and even reduce it with the constant addition of functionalities
in every new generation of products. These needs are being
addressed by highly integrated and efficient power platforms
which are constantly improving to match the market needs for
the best performing controllers.
AUTOMOTIVE and INDUSTRIAL
Moving forward, SOI technology will expand TowerJazz’s reach
into other untapped markets and sockets in both automotive
and industrial markets. Specific markets include motor drivers
for various products such as drones, power tools, and large
stacks of batteries for automotive.
The majority of TowerJazz’s IP will be interchangeable between
its technologies which creates easier market penetration.
targets power
For example, TowerJazz’s 80V platform
management integrated circuit (PMIC) applications in the
mobile space, wearables, notebooks and power management
DC-DC in telecom and other consumer applications, as it
offers high levels of functional integration, integrated memory
and very efficient power stage. The technology is also suitable
for DC-DC applications and electronic control units (ECUs) in
automotive applications.
FOCUS for 2016
In portable markets, TowerJazz has won several designs due to
the ability to integrate complex digital functions alongside with
analog. In 2016, TowerJazz expects to further expand in these
markets with the newest flavors of technology and specific
devices being developed that will allows further penetration in
the market.
TowerJazz’s power technology is also attractive to customers
in a wide range of automotive and industrial designs that vary
from feature controllers in vehicles to very sensitive battery
management solutions for electric vehicles. SOI technology
that TowerJazz is currently developing will be a nice addition
and extension to the offering extending it to 200V.
In addition, TowerJazz’s technology can withstand positive and
negative biasing in the same design which is needed for some
of the wireless charging solutions in the market. This unique
technology will be the basis for the start of a new family of
designs.
23
THREE MEGATRENDS FUELING the INTERNET of THINGS (IoT);
IMPLICATIONS for the SEMICONDUCTOR ECOSYSTEM
Russell C. Ellwanger and Amol M. Kalburge, TowerJazz
INTERNET of THINGS (IoT)
The Internet of Things (IoT) refers
to humans, machines and the
environment communicating
using various sensor enabled
semiconductor devices.
Three years ago, we observed that three global megatrends are driving long term social, economic and technological
growth: Green Everything, Wireless Everything and Smart Everything. We also observed that these three megatrends
are encouraging greater innovation and collaboration across the semiconductor ecosystem by delivering optimal application
specific product performance through heterogeneous integration of analog interface technologies such as wireless, digital
power management, and sensing.
As an increasing number of devices are built incorporating such analog interface technologies, it becomes easier and
cheaper to connect them to each other over the internet, creating an enormous and efficient network of things, or Internet
of Things (IoT). The scale of the IoT is simply mind-boggling: estimates vary, but by 2025 there could be as many as 100
billion IoT devices worldwide, with a combined global economic impact of as much as $11 trillion. This is an unprecedented
opportunity for the semiconductor ecosystem. This is an unprecedented opportunity for TowerJazz!
IoT OPPORTUNITIES for TOWERJAZZ
HIGH RELIABILITY
SPECIALTY REQUIREMENTS
EXTENDED MARKETS
IoT related designs require high
reliability, low power and low
cost foundry technologies.
IoT demands diverse silicon
chips with integrated sensors,
memories, processors,
energy harvesting blocks,
communication means,
interfaces and security systems.
The markets of mobile
applications, power management,
and data processing will be
extended through the growth of
IoT connected devices, opening
new business opportunities for
TowerJazz.
24
THREE MEGATRENDS FUELING the INTERNET of THINGS (IoT);
IMPLICATIONS for the SEMICONDUCTOR ECOSYSTEM (CONTINUED)
GREEN
EVERYTHING
WIRELESS
EV ERY THIN G
SMART
EVE RYT HIN G
raw performance. To
Everything in the future will require some
level of digital power management
capability for greater efficiency and
portability. Green performance—raw
device performance/energy consumed—
will be far more important than just
the
improve
green performance, “things” will need
incorporate detailed monitoring,
to
measuring and controlling circuitries
that would
receive
data continuously so
that power
consumption can be optimized in the
ON and OFF state.
transmit and
In the not too distant future, almost
everything will be connected
to
everything wirelessly. Current wireless
as wireless
such
technologies
LAN, LTE, Zigbee, GPS, NFC, and
Bluetooth already offer connectivity
in most places. Further convergence
of communication standards will drive
even greater seamless connectivity in
the near future.
As electronics become an even more
integral part of our lives, and not only
for entertainment, but also for critical
situations to protect humans, assets or
the environment from harm, they must
become smart and self-reliant. Smart
electronics are able to “sense” the
stimuli and make decisions based on
pre-determined (or ad-hoc) criteria and
respond with minimal latency. We believe
that an increasing number of systems
will become smart by incorporating
multiple sensory technologies and will
impart intelligence to the network they
are connected to.
IMPLICATIONS for the SEMICONDUCTOR ECOSYSTEM PLAYERS
Fabless/IDMs:
For the past several decades, Moore’s
Law was the engine for innovation in
the semiconductor
industry. Fabless
and IDM companies were able to take
in digital
advantage of predictability
silicon technology advancement to create
enormous economic and technological
value. But Moore’s Law has now hit a
wall due to fundamental limits of physics
and economics. As a result, Fabless/IDM
companies are relying more on “More-
than-Moore” or specialty technologies—
primarily analog, RF, Power/BCD, and
sensing (optical, thermal, mechanical and
magnetic)—to drive innovation and value
in their product portfolios. Indeed, these
analog-intensive technologies continue to
complement core digital technologies that
are becoming more and more limited to
computing and storage functions.
that
Design Enablement/EDA:
Convergence of multiple heterogeneous
technologies calls
for enrichment
of design enablement offerings and
capabilities from foundries and EDA
vendors. The EDA software providers
tools and software
must develop
platforms
seamless
integration of digital and analog
Foundry
technologies.
intensive
PDKs must offer a strong foundation
and standard building blocks
for
the base digital CMOS technology
and provide advanced and modular
features for designing and simulating
RF, high voltage, sensors and/or novel
packaging technologies.
enable
Foundries:
Thanks to Moore’s Law, digital CMOS
focused foundries have enjoyed a nice
sustained growth rate over the past
several decades. But with Moore’s
Law stalled, analog focused foundries
are earning their place in the sun with
their highly differentiated specialty
technology offerings. Developing
capabilities in specialty technologies
takes many years, even decades, of
experience and investment. Specialty
foundries must
integrate organic
capabilities with inorganically acquired
disruptive capabilities
to provide
customers a single seamless portfolio
of
technologies. TowerJazz has
successfully demonstrated this foundry
model by becoming the first specialty
foundry to cross the $1B run-rate.
Summary
Green Everything, Wireless Everything, and Smart Everything are the three global megatrends that are fueling the Internet
of Things revolution. These megatrends will have profound impact on the entire semiconductor ecosystem. Players like
TowerJazz and our customers that exploit a broad range of analog-intensive technologies, integrated with cost effective
digital technologies, are poised to thrive in this ecosystem.
1 R.C Ellwanger and A. M. Kalburge, “Three Global Megatrends and the Implications for the Semiconductor Ecosystem,” Global Semiconductor Alliance
Forum Vol. 20 (2), 11 (2013)
2 http://www.huawei.com/minisite/gci/en/index.html
3 http://www.mckinsey.com/business-functions/business-technology/our-insights/the-internet-of-things-the-value-of-digitizing-the-physical-world
25
AEROSPACE
& DEFENSE
TowerJazz, through its Newport Beach facility (Jazz Semiconductor), supplies strategic, on-
shore foundry services for critical U.S. Aerospace and Defense (A&D) applications through
its industry and segment expertise.
As the world’s largest specialty foundry and fastest growing
foundry in the industry, TowerJazz leverages its resources
and infrastructure to support the current industry trends
with ITAR, as well as “Trusted” fabrication through its U.S.
subsidiary, Jazz Semiconductor Trusted Foundry (JSTF).
As the only on-shore pure play foundry that offers the
widest range of technologies, TowerJazz provides features
developed and focused to support A&D customers for
government, military, and defense requirements, including
large die ROICs, imagers, MEMS and millimeter wave
devices, among others.
TowerJazz’s U.S. customer base for A&D applications is
primarily confidential; it is comprised of top government
prime contractors, DOD agencies, DARPA and other
government agencies, various national laboratories, leading
universities, and a large number of other key mid/small/
start-up customers supporting the A&D community.
MAIN APPLICATIONS
2015 ACHIEVEMENTS & COLLABORATIONS
Recent activities to further support aero/military customers
include the DMEA
(Defense Microelectronics Activity)
Accreditation of Jazz Semiconductor Trusted Foundry
(JSTF), and implementation of new technologies that may
be developed by A&D customers for applicability in the aero/
military market, including CMOS image sensors, ROICs, and
new capabilities for infrared (IR) camera components.
The main applications that TowerJazz’s A&D offerings
are used for include IR detectors and components,
visible and near-IR image sensors, other sensors and
detectors, phased arrays, beam formers, radar, high
speed communications, high speed data transmissions,
and transfer and receive systems, among others. These
applications are used in defense systems, weather and
surveillance radar, space exploration satellites, computer
network and communication systems, and common data
transmit and receive devices.
NEWS ANNOUNCEMENTS
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
02/12/15 —TowerJazz and FLIR Systems
Partner to Deliver Next Generation
Commercial Infrared Technology
05/14/15 —TowerJazz and UCSD Demonstrate
First 5G 256-Element 60 GHz Silicon Wafer-
Scale Phased Array Transmitter
07/08/15— TowerJazz and Anatrix
Develop RadHard RF ASIC; Reaches Flight
Qualification
FOCUS for 2016
Looking toward the future, TowerJazz sees trends in three-
dimensional integrated circuits (3D ICs), silicon-based
MEMS switches, migration of visible/near-IR image sensors
to silicon/CMOS and solid state platforms, and very large/
wafer-scale phased arrays—all of which TowerJazz’s
A&D technologies are well positioned to support. These
applications are used to continue improving performance
(clearer and sharper images for all detectors and sensors),
and to provide faster, more accurate, smaller, more mobile,
and lower power systems—all for the benefit and protection
of homeland security interests, the general population, and
last but not least, Department of Defense (DoD) forces and
support teams.
“In 2016, given the continued focus and maturity of our 130nm technology node—in both CMOS and SiGe—we look forward
to increasing penetration in our existing customer base as well as attracting new customers. With this, combined with our existing
suite of world class foundry offerings, we will continue to forecast an expected growth at a rate of 15% for our A&D business.”
Dr. Marco Racanelli
Senior Vice President & General Manager of RF/High Performance Analog & Power Business Groups
General Manager of US A&D Business Group, Newport Beach Site Manager
26
MIXED-SIGNAL/CMOS
PLATFORM
TowerJazz’s Mixed-Signal/CMOS platforms are an optimal solution for digital, analog, radio
frequency (RF) and automotive applications, and supports designers who are seeking
volume production from 0.35um down to 45nm.
TowerJazz provides flexible and highly customizable
processes for General Purposes (GP), Low-Power (LP), as
well as HVCMOS, a world-renowned modeling kit, best-
in-class PDK support to achieve industry-leading yields,
maximum performance, cost-effectiveness and fast time-to-
market.
Decades of CMOS technology expertise enable TowerJazz to
deliver an optimal solution to its customers with outstanding
system performances, service and support. By using
Mixed Signal/CMOS and RFCMOS processes, customers
achieve high performance and optimal silicon utilization.
TowerJazz’s broad range of process technologies and the
unique ability to customize a process in a very short time,
allows customers to achieve highly cost effective solutions
within aggressive timelines.
TowerJazz is able to meet the high volume needs of its
customers using its multiple manufacturing sites, including
its access to TowerJazz Panasonic Semiconductor Co.’s
(TPSCo’s) three facilities in Japan.
2015 ACHIEVEMENTS & COLLABORATIONS
During the last year, TowerJazz has successfully qualified
some of its mixed-signal and CMOS platforms to TPSCo,
creating more available capacity and manufacturing flexibility
for the benefit of its customers. In addition, TowerJazz
announced the availability of the 300mm 65nm millimeter
wave (mmWave) LP RFCMOS platform mainly targeted for
a variety of RF applications, such as Automotive Radar
Generation-1 (up to 23GHz), Automotive Radar Generation-2
(60GHz), WiFi/WiMax as well as other RFCMOS applications
for Bluetooth, GPS, and LTE transceivers. State of the
art performances were presented at the 8th International
Automotive Electronics Technology Expo (CAR-ELE) in
Tokyo, Japan. During 2015, TowerJazz has also expanded its
0.18um Al platform with Super Low-Leakage MOSFETs and
Super Low-Leakage libraries to best support the emerging
IoT market.
“ During 2015, we’ve met the very aggressive goal to qualify and offload some of our main TS16 and TS18 products
from Israel to TPSCo to further enhance our manufacturing flexibility and capacity. In addition, in 2016 we expect to
first serve customers for the new 65nm RFCMOS platform at our 300mm Fab in Uozu, Japan, and the HVCMOS 18V
platform, developed for LCD source drivers in Tonami, Japan.”
Mr. Shimon Greenberg
Vice President of Mixed-Signal/CMOS Business Unit
NEWS ANNOUNCEMENTS
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
05/05/15—TowerJazz and Dolphin Integration
to offer Chip Developers a Complete Solution
addressing the Low Power Requirements of
the Fast Growing IoT Market
09/24/15—TPSCo Announces Development
of the First Comprehensive 65nm mmWave
RFCMOS Platform
MAIN APPLICATIONS
FOCUS for 2016
The target markets for TowerJazz’s
Mixed-Signal/CMOS offering are
medical,
consumer, computing,
industrial, automotive, aerospace &
defense. The main applications are
used for various types of controllers,
LCD display controllers, analog
switches and audio needs, as well
as applications for the Internet-of-
Things (IoT).
Looking toward the future, TowerJazz
sees higher demands for high voltage
CMOS technologies supporting LCD
displays and automotive applications as
well as low-power/low-leakage process
variants to support the rapid growth of
the IoT market. In addition, the newly
announced RFCMOS platform will help
TowerJazz penetrate and serve multiple
new markets such as WiFi, Wireless
HDMI, automotive radars and more.
27
TRANSFER, OPTIMIZATION and DEVELOPMENT
PROCESS SERVICES (TOPS™)
The TowerJazz TOPS business unit (BU) targets integrated device manufacturers (IDMs)
that have fablight outsourcing strategies, capacity shortage with internal fabs, double
source policies, and fab closures for cost reduction activities.
The TOPS BU also works with fabless companies that
have process IP looking for a manufacturing site, process
developed at an R&D center that will be transferred and
optimized to production at TowerJazz fabs as well as those
needing to develop from R&D to production and those
wanting to develop process IP, process module or flow in
TowerJazz fabs.
The main customer applications currently supported by
TOPS are discrete FETS for power applications, non-volatile
memory (NVM), and magnetic memories, although TOPS
can accommodate any customer flow. The fab lite strategy
seems to be a dominant trend for TOPS’ customers — with
5" & 6" fab closures (at many customers), consolidation of
fabs, and cost reduction by moving to 8" wafers. In most
TOPS engagements with top tier IDMs, after the initial base
platforms are transferred and qualified, additional advanced
platforms are co-developed at TowerJazz sites as these fabs
possess more advanced processing tools and technology
capabilities than the IDM’s factory. These flows are long-
life, sole source flows. The second most dominant trend
is overflow capacity since companies are reluctant to
spend major capex and moving to a foundry is much more
economically feasible.
TowerJazz uses established methodologies and well-defined
success criteria which leads to first time success and record
time to production.
TOPS™ CUSTOMERS
IDMS
FABLESS COMPANIES
• ‘Fablight’ outsourcing strategy
• With process IP looking for
• Capacity shortage with internal
manufacturing site
fabs
• Double source policy
• Going through fab closure for
cost reduction activities
• Process was developed at R&D
centers and will be transferred
and optimized to production at
TowerJazz fabs
DEVELOP FROM R&D TO
PRODUCTION
• Develop process
IP, process
module or flow in TowerJazz
fabs
“2015 was a great year for the TOPS BU; many projects were completed and ramped to mass production in our
Israel and Japan fabs. In 2016, we foresee continued growth with all our customers in each of our fabs including
our recently acquired San Antonio fab.”
Mrs. Zmira Shternfeld-Lavie
Senior Vice President of Process Engineering R&D
General Manager of Transfer, Optimization and Development Process Services Business Unit (TOPS™)
2015 ACHIEVEMENTS
& COLLABORATIONS
This year was very busy for the TOPS BU with aggressive
ramping of several large customer transfers in parallel in
TPSCo’s Tonami, Japan fab as well as the start of high
volume production after a fast ramp for one of TowerJazz’s
key customers in Israel.
28
FOCUS for 2016
In the TOPS BU, the team is working on ramping to mass
production new technologies of Tier 1 customers, both
in TowerJazz’s fabs and in TPSCo. With the existing
production customers, the TOPS BU is also increasing
production volume and processing an increasing number
of prototypes for new products.
DESIGN
ENABLEMENT
TowerJazz provides a design enablement platform that complements its sophisticated
technology and enables its customers with a quick and accurate design cycle.
The company’s design enablement provides design kits,
intellectual property (IP) and dedicated design support so
its customers succeed with first-time working silicon and
fast time-to-market. TowerJazz has deep partnerships with
all the major electronic design automation (EDA) vendors
and IP providers to supply its customers with the most
comprehensive and up-to-date design solutions available in
the market. In addition, partnering with EDA vendors enables
interoperability across a wide variety of software tools, so
its mutual customers can benefit from the “best-of-breed”
products for their particular application and EDA budgets.
2015 ACHIEVEMENTS & COLLABORATIONS
TowerJazz has continued to focus its latest design enablement
efforts in the emerging power management area as well as the
RF/HPA (high performance analog) and silicon-on-insulator
(SOI) areas to provide design enablement platforms that
complement its advanced technologies. A particular focus has
been to enable the most reliable and robust integrated circuits
(ICs) or chips for its customers by providing highly refined and
customized tools that check the ICs are operating within safe
electrical limits (safe operating area or SOA checks). This, in
turn helps TowerJazz customers meet the ever demanding
reliability specifications from their end customers.
TowerJazz provides silicon verified and highly scalable device
models for up front design optimization and robust physical
design tools for rapid synthesis of schematics concepts into
the final blueprints used to manufacture customer parts. The
company’s unparalleled customer support at every stage of
the design flow ensures confidence in designs at near zero
risk. TowerJazz process design kits (PDKs) include unique
electrostatic discharge (ESD) parameterized-cells (P-Cells)
and a special electrical rule checker (ERC) for ESD rules.
In 2015, TowerJazz announced collaboration with multiple
partners to consistently improve the design process for its
customers and participated in industry design conferences
to showcase its manufacturing capabilities. For instance,
TowerJazz and Dolphin Integrated announced a solution to
address the low power requirements of the fast growing IoT
market, TowerJazz implemented Mentor Graphics’ Calibre
Auto-Waiver to reduce tapeout cycle time, and TowerJazz
participated at IC CAD in China to support its fast growth and
showcase its manufacturing capacity in the Asia Pacific region.
“ 2015 was a momentous year for our Design Enablement team. We delivered best in class design kits for our RF, power
management, and CIS platforms with particular focus on enabling reliable products. We look forward to continue delivering
quick and accurate design services to our customers while ensuring their success.”
Mr. Ori Galzur
Vice President of VLSI Design Center & Design Enablement
WORLDWIDE DESIGN CENTER
TowerJazz’s Worldwide Design Center
services help customers to accelerate
the design-to-silicon process and
enhance first-time silicon success.
Chipmakers can augment their own
the design
design
resources with
capabilities
specialized
are
that
TowerJazz’s manufacturing
for
technologies. Design support can assist
in all or part of the design flow. The
company’s in-depth knowledge of the
fab and processes provide a substantial
advantage when implementing state-
the
of-the art designs
boundaries of technology.
that reach
its customers’
TowerJazz’s IP and engineering services
team
can augment
efforts with key IP blocks, providing the
specific skills and expertise critical to
successful implementation. TowerJazz
also operates an Authorized Design
Center
that has
specialized design capabilities to create
customer IC designs.
(TADC) program
FOCUS for 2016
TowerJazz consistently enhances its IP
portfolio to further enable its customers
to concentrate on their design core
while taking advantage of a clean and
easy IP integration. Moving forward
into 2016, TowerJazz will continue to
focus on providing unparalleled design
services and support for its worldwide
customers.
29
RESEARCH and DEVELOPMENT
an ENVIRONMENT of INNOVATION
TowerJazz has created an innovation environment cultivated
by the knowledge and skills of highly educated and
experienced R&D staff in all its fabs, worldwide. Each of the
sites has specific experience, being the center of knowledge
for the company, such as RF & MEMS in Newport Beach (CA);
CMOS image sensors, NVM and power devices in Migdal
2015 ACHIEVEMENTS & COLLABORATIONS
In 2015, R&D projects were supported by both internally
allocated budgets and by governmental and international
programs, in all TowerJazz Business Units (BUs).
• Radio frequency (RF) and high performance analog
(HPA) innovation projects were focused on furthering
TowerJazz’s RF CMOS SOI technology in the fields of
antenna switches, power amplifiers and high speed
SiGe devices.
• R&D activities in the field of power management were
focused on the development of novel features, such
as original non-volatile memories (NVMs), specialized
patented silicon high-voltage devices, and GaN devices
for future production platforms.
• TowerJazz’s CMOS
image sensor BU performed
extensive studies in the fields of IR sensors for gesture
recognition, fast global shutter image sensors and
back-side illuminated imagers.
• The CMOS and TOPS BUs made significant progress in
feasibility studies of semiconductor sensors and MEMS
devices (gas sensors, magnetic field sensors, radiation
sensors, etc.)
The R&D team fostered collaboration between sites for
R&D activities in parallel with the company’s manufacturing
strategy that included technology transfers between the sites.
Combining the experience of R&D engineers from diverse
fields brought up novel ideas that opened breakthrough
business opportunities for TowerJazz customers.
GRANT and PROJECT WINS
TowerJazz won several prestigious international grants, in
particular the European Union H2020 project “GREAT”—STT
MRAM memories integrated with sensors and RF devices for
Internet of Things (IoT) applications. Several R&D projects,
in particular the field thermal imager technology, with special
focus on infrared and high speed communications continue
and were run in collaboration with US Defense Agencies.
Haemek (Israel); and automotive chips, scaled down CMOS
and CMOS with embedded features in TPSCo’s Japanese fabs.
PRESS ANNOUNCEMENTS
Several R&D achievements were announced demonstrating
the leadership position of TowerJazz in a broad range
of technological areas. For example, RF MEMS tuners
developed together with Cavendish-Kinetics, next generation
FLIR infrared detectors for Apple and Android products,
and back-side illuminated images for UV range developed
together with GPixel, among others.
PATENTS
TowerJazz was granted 15 patents and filed about 20 new
patent applications. The protected technologies include RF
SOI switches, SiGe Bipolar devices, semiconductor sensors
(image sensors and others), MEMS, and NVM memories with
enhanced reliability, just to name a few.
TALKS and PUBLICATIONS
TowerJazz gave 10 invited talks at international conferences
and regional seminars, such as BCTM (Boston), SOI
Conference (Shanghai), and EMRS (France). Numerous
research papers were published in prestigious international
journals, including IEEE EDL, Microelectronics Reliability,
among others. TowerJazz experts participated
in
international scientific committees, including several IEEE
and European Union boards.
Internally, the R&D team prepared issues of the TowerJazz
Journal, featuring about 35 referred technical papers. The
team maintained its internal Technical Forum for its senior
technical leaders, and began TowerJazz Education Seminars
(TES) to mentor and foster young engineering talent at each
site. In addition, special forums on the IoT were held, due to
its emerging importance. Company R&D roadmaps were also
discussed at TowerJazz Global Symposium (TGS) sessions.
Dr. Yakov Roizin
TowerJazz Fellow & Director
of Emerging Technologies
Dr. David Howard
Executive Director
& TowerJazz Fellow
FOCUS for 2016
The TowerJazz R&D roadmap is aligned with the current demands and business outlooks of its customers. Main
R&D activities are focused on developing new technologies to support next generation products designed by fabless
semiconductor companies and/or IDMs.
COMMUNITY CONTRIBUTION
TowerJazz continues to uphold its charter of increasing diversity and gender equality
throughout the company’s different sites. As such, TowerJazz supports a wide range of
health, education, social and community activities that affect and involve its employees
and the community’s well-being. In 2015, TowerJazz participated in numerous activities
to support projects and organizations in the neighboring communities of its facilities.
GLOBAL AWARENESS INVESTIGATION and ACTION (GAIA) PROJECT
TowerJazz is now in its seventh year working with Dr. Stuart Fleischer, the American International School in Israel and Tel Aviv
University, in support of the Global Awareness Investigation and Action (GAIA) project which focuses on environmental research
and awareness. This project extends to multiple high schools in Israel of various ethnic and religious backgrounds, and in Europe,
as well.
in
launched carrying
In June 2015, a NASA sounding rocket
was
two student
research projects from the American
International School
Israel. These
experiments carried out in microgravity
conditions were fostered and mentored
by a team of engineers and scientists
from TowerJazz. The research payload
was collected upon splashing down in
the Atlantic and returned to the students
for analysis.
Photo Credit: NASA
TowerJazz helped to fund a children’s
book about a local bird called “Yoni the
Chickadee.” This book creates awareness
about invasive species and the damage
to local indigenous species and will be
published in both Hebrew and Arabic. An
expected 5,000 young students will learn
about Yoni in 2016.
TowerJazz also hosted an event again
this year called, “GAIA Girls Love
Science” at the Migdal Haemek facility
to generate awareness and interest in
pursuing science as a career. These girls,
who attend the American International
School in Israel, come from the U.S.
China, South Korea, India, Germany,
Israel, and Nigeria.
In addition to going into space, several
projects
funded by TowerJazz were
also launched on the ground in Israel.
The students of Jisr Az Zarka began a
micro-economic project converting trash
into treasure. Students are designing
handbags, backpacks, belts, wallets and
more out of throwaway chip bags. These
items will go on sale to support a greater
community clean-up plan that they are
developing.
TowerJazz has also become the first
corporate sponsor to provide additional
sanctuaries for Israeli endangered plants.
The Kfar HaYarok School
in Ramat
HaSharon has been working with the
Israel Nature and Parks Authority, Tel Aviv
University and the Israeli National Seed
Bank. The expansion will allow more
species of plants to be protected and
grown in larger numbers. A sanctuary
is also now being built for endangered
amphibians.
SOCIAL RESPONSIBILITY
TowerJazz contributes to the communities surrounding its factories by promoting
education, donating goods and funding programs/services. The Company and its
employees:
• Tutor kids in youth clubs and volunteer in recreational activities
• Fund an educational program for children with learning disabilities
• Participate in teaching English to the youth, improving their communication skills
• Collaborate with environmental organizations and retirement institutions to help
renovate buildings, prepare food packages and participate in blood drives
• Contribute to “Operation Santa Claus” and “Senior Santa & Friends” in Newport
Beach, CA to donate and deliver toys, books and other items to people in need
during the Holidays.
31
31
Q4 and FISCAL YEAR 2015 FINANCIAL RESULTS
PRESS RELEASE
TowerJazz Provides 2016 Growth Outlook; Built upon 2015 Notable Increases
in Record Revenues with the Associated Margins and Net Profit
Fourth Quarter 2015 Results: Record Revenue of $255 million, Record EBITDA of $76 million,
Strong Net Profit of $22 million
MIGDAL HAEMEK, ISRAEL – February 24, 2016 – TowerJazz
(NASDAQ: TSEM & TASE: TSEM) today reports results for the
fourth quarter and full year of 2015 ended December 31, 2015.
Highlights
• Record results for the fourth quarter of 2015:
- Revenues at a record of $255 million, crossing the $1
billion annual run rate, with 8% growth as compared
to the fourth quarter of 2014, including 21% organic
growth (i.e excluding revenues from Panasonic);
- Net profit of $22 million in the fourth quarter,
compared with $0.6 million in the fourth quarter of
2014 and $14 million in the prior quarter;
- EBITDA of $76 million, representing growth of 35%
compared to the fourth quarter of 2014 and 20%
quarter over quarter ;
• Record revenues for the full year of 2015 of $961
million, 16% year over year growth, including 27%
organic growth (i.e excluding revenues from Micron
and Panasonic);
• Cash and short-term deposits balance as of December
31, 2015 of $206 million as compared to December 31,
2014 cash balance of $187 million. Net debt is $105
million as of December 31, 2015, representing $213
million lower net debt year over year;
- December 31, 2015 net debt to EBITDA ratio below
0.4X;
32
• During the first quarter of 2016, completed the acquisition
of Maxim’s fab in San Antonio, Texas, expanding
worldwide manufacturing capacity by additional 28,000
wafers per month with 15 year committed supply
agreement with Maxim. This is in addition to the existing
foundry relationship between the companies;
• Expects revenues for the first quarter of 2016 to be
$276 million with an upward or downward range of
5%, representing 22% year over year increase and 8%
quarter over quarter growth.
Fourth Quarter Results Overview
Revenues for the 2015 fourth quarter were a record $255 million,
reflecting 8% growth as compared with the fourth quarter of
2014 and 4% higher than the immediately preceding quarter.
GAAP gross profit for the fourth quarter of 2015 was $65 million,
with 25% gross margins and an increase of 69% as compared
with $38 million gross profit in the fourth quarter of 2014, with
16% gross margins and an increase of 17% as compared with
$55 million gross profit in the immediately preceding quarter,
with 23% gross margins.
GAAP operating profit was $34 million for the fourth quarter
of 2015, 21% increase as compared with $28 million reported
in the fourth quarter of 2014 and 43% increase as compared
with $24 million operating profit in the immediately preceding
quarter.
GAAP net profit for the fourth quarter of 2015 was $22 million,
or $0.28 basic earnings per share, demonstrating increased
sustainable GAAP net profit, as compared with $14 million or
$0.18 earnings per share in the immediately preceding quarter
and $0.6 million, or $0.01 earnings per share in the fourth
quarter of 2014.
On a non-GAAP basis, as described and reconciled in the
tables below, gross profit for the fourth quarter of 2015 was
$104 million, reflecting a 41% gross margin, an increase of
24% as compared with $84 million gross profit reported for the
fourth quarter of 2014. On a non-GAAP basis, net profit for the
quarter was $70 million or $0.88 basic earning per shares, as
compared with $46 million or $0.83 per share reported in the
fourth quarter of 2014, and as compared with $58 million or
$0.74 per share reported in the immediately preceding quarter.
EBITDA totaled to approximately $76 million or 30% EBITDA
margin, a 35% increase as compared with $56 million or
24% EBITDA margin in the fourth quarter of 2014 and a 20%
sequential increase as compared with $63 million or 26%
EBITDA margin in the immediately preceding quarter.
Cash and short-term deposits on December 31, 2015 are $206
million, as compared with $155 million as of September 30,
2015. The main cash activities during the fourth quarter of 2015
were comprised of the following: $55 million cash generated
from operations, excluding interest payments of $1.6 million;
$4 million received from exercise or warrants and options;
a receipt of $71 million long-term loan by TPSCo from JA
Mitsui bank and Sumitomo Mitsui Trust bank; investments of
$58 million in fixed assets, net; $18 million of debt principal
payments to banks and bondholders; and $1.6 million dividend
payment to Panasonic by TPSCo.
Shareholders’ equity as of December 31, 2015 was $386
million, nearly 2X higher as compared with $196 million as of
December 31, 2014 and an increase of 19% as compared with
$325 million as of September 30, 2015. Current ratio increased
to 2.1X, as compared with 1.3X as of December 31, 2014 and
1.6X as of September 30, 2015. Net debt amounted $105 million
as of December 31, 2015, reflecting a net debt to EBITDA ratio
of below 0.4X, as compared with net debt of $318 million as of
December 31, 2014.
Full Year 2014 Financial Results
Revenues for 2015 were a record $961 million, representing
16% growth, as compared with $828 million revenues in 2014.
GAAP gross profit for 2015 was $205 million, more than 3X as
compared with gross profit of $64 million in 2014. Net loss for the
year on a GAAP basis was $30 million, or $0.40 loss per share,
and included $110 million of non-cash financing expenses, net,
mainly attributed to accretion and amortization non-cash costs
resulting from the successful accelerated conversion of Series
F debentures during 2015. GAAP net profit in 2014 was $4.3
million, which included the gain from the acquisition of TPSCo
in the net amount of $166 million and $56 million Nishiwaki fab
restructuring and impairment costs.
EBITDA for 2015 was $249 million, an increase of 62%
compared with $154 for 2014.
Net profit on a non-GAAP basis, for the full year of 2015 was
$231 million, or $3.11 basic earnings per share, 81% higher
than $128 million or $2.46 earnings per share, in 2014.
As many of the Company’s investors are located in Israel and
in Europe and are familiar with and use International Financial
Reporting Standards rules (“IFRS”) the Company is voluntarily
providing certain financial information on an IFRS basis. Net
profit under IFRS was approximately $43 million for the year
ended December 31, 2015 as compared with approximately
$30 million loss under US GAAP, and basic earnings per share
was $0.58 under IFRS as compared with $0.40 basic loss per
share under US GAAP. The main difference between US GAAP
and IFRS accounting principles as relates to the Company’s
statement of operations for this reporting period is the
different treatment of financial instruments affecting financing
expenses, net. For the comparable year ended December 31,
2014, net profit under IFRS was approximately $25 million as
compared with approximately $4 million under US GAAP, and
basic earnings per share was $0.48 per share under IFRS as
compared with $0.08 per share under US GAAP.
Cash and short-term deposits on December 31, 2015 are $206
million, as compared with $187 million as of December 31,
2014. The main cash activities during the year were comprised
of the following: $208 million cash generated from operations,
excluding interest payments of $12 million; $14 million
received from exercise or warrants and options; a receipt of
$71 million long-term loan by TPSCo from JA Mitsui bank
and Sumitomo Mitsui Trust bank; investments of $166 million
in fixed assets, net; $70 million of debt principal payments to
banks and bondholders; and $25 million Nishiwaki’s employees
termination payments in connection with its cessation of
operations.
Business Outlook
TowerJazz expects revenues for the first quarter of 2016 ending
March 31, 2016 to be $276 million, with an upward or downward
range of 5%, representing approximately 22% year over year
revenue growth as compared with the first quarter of 2015
and 8% growth as compared with the fourth quarter of 2015.
This expected growth is partially attributed to the inclusion of
revenues from the San Antonio fab, having commenced in the
beginning of February 2016.
Chairman and CEO Commentaries
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz,
commented, “We are most enthusiastic to enter 2016 having
achieved above $1 billion of annualized revenue run rate, and
having (i) demonstrated sustainable and growing net profits
commencing the second quarter of the past year and (ii) a
forward looking business model of profit margin growth utilizing
cost covered available capacity to support the continued high
customer demand.”
the strong
Ellwanger continued, “Built upon
revenue
and margins growth, we launched a number of strategic
technological and operational initiatives. Among those we
previously announced were 300mm advanced roadmaps
activities for CMOS image sensors and RF products and
the recent acquisition of the San Antonio fab from Maxim,
which allows us to increase our manufacturing capacity while
enhancing our existing customer relationship with this world
leader. These and other such activities add to and build upon a
strong foundation enabling continued growing performance, as
reflected in our guidance for the first quarter of 2016.”
Mr. Amir Elstein, TowerJazz Chairman of the Board, concluded:
“2015 was a noteworthy year, presenting continuous increase
in revenues and profitability, and even more important, setting
the stage for future growth by adding significant manufacturing
33
capacity and advance leading technological offerings, in order
to better serve our customers. Our stated vision is to be the
world leader in specialty foundry solutions. With a strong and
growing customer base, which includes long term tier-1 partners
and with meaningful activities fueling our design wins pipeline,
I believe that in 2016 we will continue this path, successfully
delivering on our strategy to build an increasingly profitable, fast
growing and world leading specialty semiconductor foundry.”
The Company presents its financial statements in accordance with U.S. GAAP. Some of
the financial information in this release, including in the financial tables below, may be
considered “non-GAAP financial measures” under Regulation G and related reporting
requirements promulgated by the Securities and Exchange Commission as they apply
to our company. These non-GAAP financial measures are calculated excluding one or
more of the following: (1) depreciation and amortization; (2) compensation expenses
in respect of equity grants to directors, officers and employees; (3) Nishiwaki Fab
restructuring costs and impairment; (4) TPSCo pre-merger costs; (5) financing
expenses, net, other than interest accrued, such that non-GAAP interest expenses
and other non-cash financial expenses, net, include only interest accrued during the
reported period, whether paid or payable; (6) gain from acquisition; and (7) income tax
expense, such that non-GAAP income tax expense includes only taxes paid during the
reported period on a cash basis. Non-GAAP financial measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial measures. The tables also
present the GAAP financial measures, which are most comparable to the non-GAAP
financial measures as well as reconciliation between the non-GAAP financial measures
and the most comparable GAAP financial measures. As applied in this release, the
term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists
of profit or loss, according to U.S. GAAP, excluding Nishiwaki Fab restructuring costs
and impairment, TPSCo pre-merger costs, gain from acquisition, interest and other
financing expenses (net), taxes, non-controlling interest, depreciation and amortization
and stock based compensation expenses. EBITDA is akin to non-GAAP operating
profit, which is reconciled in the tables below. EBITDA is not a required GAAP financial
measure and may not be comparable to a similarly titled measure employed by other
companies. EBITDA and the non-GAAP financial information presented herein should
not be considered in isolation or as a substitute for operating profit, net profit or loss,
cash flows provided by operating, investing and financing activities, per share data or
other profit or cash flow statement data prepared in accordance with GAAP and is not
necessarily consistent with the non-GAAP data presented in previous filings. Net debt,
as presented in this report, is comprised of the outstanding principal amount of banks
loans (in the amounts of approximately $246 million and $194 million as of December
31, 2015 and December 31, 2014, respectively) and the outstanding principal amount
of debentures (in the amounts of approximately $65 million and $311 million as of
December 31, 2015 and December 31, 2014, respectively), less cash, cash equivalents
and interest bearing deposits (in the amounts of approximately $206 million and $187
million as of December 31, 2015 and December 31, 2014, respectively).
The Company uses US GAAP in the preparation of its financial statements. As many
of the Company’s investors and analysts are located in Israel and in Europe and are
familiar with and use IFRS, the Company has included on a voluntary basis in this
release certain financial information on an IFRS basis in addition to US GAAP financials.
IFRS differs in certain significant aspects from U.S. GAAP. Net profit under IFRS was
approximately $43 million for 2015 and net profit for 2014 was approximately $25
million with the main difference between US GAAP and IFRS accounting principles
as relates to the Company’s statement of operations for this reporting period being
the different treatment of financial instruments affecting non-cash financing expenses,
net.
About TowerJazz
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM)
and its fully owned U.S. subsidiary Jazz Semiconductor, Inc.
operate collectively under the brand name TowerJazz, the
global specialty foundry leader. TowerJazz manufactures
integrated circuits, offering a broad range of customizable
process technologies including: SiGe, BiCMOS, mixed-signal/
CMOS, RF CMOS, CMOS image sensor, integrated power
management (BCD and 700V), and MEMS. TowerJazz also
provides a world-class design enablement platform for a quick
and accurate design cycle as well as Transfer Optimization and
development Process Services (TOPS) to IDMs and fabless
companies that need to expand capacity.
To provide multi-fab sourcing and extended capacity for its
customers, TowerJazz operates two manufacturing facilities in
Israel (150mm and 200mm), two in the U.S. (200mm) and three
additional facilities in Japan (two 200mm and one 300mm)
34
through TowerJazz Panasonic Semiconductor Co. (TPSCo),
established with Panasonic Corporation of which TowerJazz
has the majority holding. Through TPSCo, TowerJazz provides
leading edge 45nm CMOS, 65nm RF CMOS and 65nm
1.12um pixel technologies, including the most advanced
image sensor technologies. For more information, please visit
www.towerjazz.com or www.tpsemico.com.
CONTACTS:
Noit Levi | TowerJazz
+972 4 604 7066 | Noit.levi@towerjazz.com
Gavriel Frohwein | GK Investor Relations
(646) 688 3559 | towerjazz@gkir.com
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 and you should not place any undue reliance on such
forward-looking statements. Potential risks and uncertainties include, without
limitation, risks and uncertainties associated with: (i) over demand for our foundry
services and/or products that exceeds our capacity; (ii) maintaining existing customers
and attracting additional customers, (iii) demand in our customers’ end markets, (iv)
high utilization and its effect on cycle time, yield and on schedule delivery which
may cause customers to transfer their product(s) to other fabs, (v) operating results
fluctuate from quarter to quarter making it difficult to predict future performance,
(vi) impact of our debt and other liabilities on our financial position and operations,
(vii) our ability to successfully execute acquisitions, integrate them into our business,
utilize our expanded capacity and find new business, (viii) fluctuations in cash flow,
(ix) our ability to satisfy the covenants stipulated in our agreements with our lenders,
banks and bond holders, (x) pending litigation, including the putative shareholder class
actions that were recently filed against the Company, certain officers, its directors
and/or its external auditor in the US and Israel, following a short sell thesis report
issued in January 2016 by a short-selling focused firm, which the Company believes
contains false and misleading information about the Company’s strategy, business
model and financials; (xi) our majority stake in TPSCo and acquisition of TJT, (xii) in the
course of the operations cessation, dissolution and closure of TJP within the scope
of restructuring our activities and business in Japan, settling any future claims or
potential claims from suppliers or other third parties, (xiii) meeting the conditions set in
the approval certificates received from the Israeli Investment Center under which we
received a significant amount of grants in past years, (xiv) receipt of orders that are
lower than the customer purchase commitments, (xv) failure to receive orders currently
expected, (xvi) possible incurrence of additional indebtedness, (xvii) effect of global
recession, unfavorable economic conditions and/or credit crisis, (xviii) our ability to
accurately forecast financial performance, which is affected by limited order backlog
and lengthy sales cycles, (xix) may have obsolete inventory if forecasted demand
exceeds actual demand when we manufacture products before receipt of customer
orders, (xx) the cyclical nature of the semiconductor industry and the resulting periodic
overcapacity, fluctuations in operating results and future average selling price erosion,
(xxi) to execute debt re-financing, restructuring and/or fundraising to enable the
service of our debt and other liabilities, (xxii) operating our facilities at high utilization
rates which is critical in order to cover a portion or all of the high level of fixed costs
associated with operating a foundry, and our debt, in order to improve our results,
(xxiii) the purchase of equipment to increase capacity, the timely completion of the
equipment installation, technology transfer and raising the funds therefor, (xxiv) the
concentration of our business in the semiconductor industry, (xxv) product returns,
(xxvi) our ability to maintain and develop our technology processes and services to
keep pace with new technology, evolving standards, changing customer and end-user
requirements, new product introductions and short product life cycles, (xxvii) competing
effectively, (xxviii) use of outsourced foundry services by both fabless semiconductor
companies and integrated device manufacturers; (xxix) achieving acceptable device
yields, product performance and delivery times, (xxx) our dependence on intellectual
property rights of others, our ability to operate our business without infringing others’
intellectual property rights and our ability to enforce our intellectual property against
infringement, (xxxi) retention of key employees and recruitment and retention of skilled
qualified personnel, (xxxii) exposure to inflation, currency exchange and interest rate
fluctuations and risks associated with doing business locally and internationally and
fluctuations in the market price of our traded securities, (xxxiii) issuance of ordinary
shares as a result of conversion and/or exercise of any of our convertible securities
may depress the market price of our ordinary shares and may impair our ability to
raise future capital, (xxxiv) meeting regulatory requirements worldwide, including
environmental and governmental regulations; and (xxxv) business interruption due to
fire and other natural disasters, the security situation in Israel and other events beyond
our control such as power interruptions.
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 Tower’s most
recent filings on Forms 20-F and 6-K, as were filed with the Securities and Exchange
Commission (the “SEC”) and the Israel Securities Authority and Jazz’s most recent
filings on Forms 10-K and 10-Q, as were filed with the SEC. Future results may differ
materially from those previously reported. The Company does not intend to update,
and expressly disclaims any obligation to update, the information contained in this
release.
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, September 30, December 31,
2015
2015
2014
A S S E T S
CURRENT ASSETS
Cash, cash equivalents and interest bearing deposits
Trade accounts receivable
Other receivables
Inventories
Other current assets
Total current assets
LONG-TERM INVESTMENTS
PROPERTY AND EQUIPMENT, NET
INTANGIBLE ASSETS, NET
GOODWILL
OTHER ASSETS, NET
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of loans and debentures
Trade accounts payable
Deferred revenue and customers’ advances
Other current liabilities
Total current liabilities
LONG-TERM DEBT
LONG-TERM CUSTOMERS’ ADVANCES
EMPLOYEE RELATED LIABILITIES
DEFERRED TAX LIABILITY
OTHER LONG-TERM LIABILITIES
Total liabilities
TOTAL SHAREHOLDERS’ EQUITY
$205,575
110,065
7,376
105,681
18,030
$155,348
122,686
7,263
104,396
23,731
$187,167
99,166
5,759
87,873
14,119
446,727
413,424
394,084
11,737
459,533
34,468
7,000
6,759
12,050
430,477
36,718
7,000
7,220
11,896
419,111
42,037
7,000
10,018
$966,224
$906,889
$884,146
$33,259
91,773
23,373
62,714
211,119
256,875
21,102
14,189
69,744
7,609
580,638
385,586
$49,224
111,917
14,752
76,765
252,658
206,801
21,110
15,786
76,197
9,730
582,282
324,607
$119,999
98,632
5,478
76,216
300,325
267,087
6,272
16,699
75,278
22,924
688,585
195,561
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$966,224
$906,889
$884,146
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED SOURCES AND USES REPORT
(dollars in thousands)
Year
ended
December 31,
2015
Three months
ended
December 31,
2015
Three months
ended
September 30,
2015
Three months
ended
December 31,
2014
Cash at beginning of the period
$187,167
$155,348
$142,503
$195,116
Cash from operations, excluding interest payments
Exercise of warrants and options, net
Long-term loan received by TPSCo
Investments in property, equipment and other cap-ex
Debt repayment—principal
Debt repayment—interest
Nishiwaki cessation—employee termination related, net
TPSCo dividend to Panasonic
Cash at end of the period
207,584
14,424
70,592
(165,655)
(69,689)
(12,371)
(24,907)
(1,570)
54,779
4,168
70,592
(58,137)
(18,006)
(1,599)
—
(1,570)
54,689
4,602
41,218
5,654
—
—
(39,579)
(3,000)
(3,867)
—
—
(26,569)
(15,980)
(12,708)
436
—
$205,575
$205,575
$155,348
$187,167
35
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring costs and impairment, net
OPERATING PROFIT
INTEREST EXPENSE, NET
OTHER NON CASH FINANCING EXPENSE, NET
OTHER INCOME (EXPENSE), NET
PROFIT BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE)
PROFIT BEFORE NON CONTROLLING INTEREST
NON CONTROLLING INTEREST
NET PROFIT
BASIC EARNINGS PER ORDINARY SHARE
Weighted average number of ordinary shares outstanding - in
thousands
DILUTED EARNINGS PER ORDINARY SHARE
Net profit used for diluted earnings per share
Weighted average number of ordinary shares outstanding — in
thousands, used for diluted earnings per share
Three months ended
December 31,
September 30,
December 31,
2015
GAAP
2015
GAAP
2014
GAAP
254,602
190,072
64,530
15,704
15,478
(991)
30,191
34,339
(2,366)
(12,751)
70
19,292
4,779
24,071
(1,992)
244,181
188,798
55,383
15,980
15,348
—
31,328
24,055
(3,567)
(5,312)
(247)
14,929
(927)
14,002
(451)
$22,079
$13,551
$0.28
79,607
$0.25
$22,079
88,970
$0.18
77,370
$0.16
$13,551
86,837
235,289
197,197
38,092
14,378
15,525
(20,228)
9,675
28,417
(7,817)
(17,156)
15
3,459
740
4,199
(3,575)
$624
$0.01
55,647
$0.01
$624
66,471
36
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring costs and impairment, net
Merger related costs
OPERATING PROFIT (LOSS) (a)
INTEREST EXPENSES, NET
OTHER NON CASH FINANCING EXPENSE, NET (b)
GAIN FROM ACQUISITION, NET
OTHER INCOME (EXPENSE), NET
LOSS BEFORE INCOME TAX (a)
INCOME TAX BENEFIT
LOSS BEFORE NON CONTROLLING INTEREST (a)
NON CONTROLLING INTEREST
NET PROFIT (LOSS) (a)
BASIC EARNINGS (LOSS) PER ORDINARY SHARE
Weighted average number of ordinary
shares outstanding - in thousands
DILUTED EARNINGS PER ORDINARY SHARE (c), (d)
Net profit used for diluted earnings per share (c), (d)
Weighted average number of ordinary shares outstanding
—in thousands, used for diluted earnings per share (c), (d)
Year ended December 31,
2015
GAAP
$960,561
755,196
205,365
61,669
62,793
(991)
—
2014
GAAP
$828,008
764,220
63,788
51,841
58,783
55,500
1,229
123,471
167,353
81,894
(13,179)
(109,930)
—
(190)
(41,405)
12,278
(29,127)
(520)
$(29,647)
$(0.40)
74,366
(103,565)
(33,409)
(55,404)
166,404
(140)
(26,114)
24,742
(1,372)
5,635
$4,263
$0.08
51,798
$0.07
$4,263
63,182
(a)The differences between the above profit (loss) results for the year ended December 31, 2015 as compared with
the comparable period’s results are mainly due to: (i) $54 million increase in other non cash financing expenses,
mainly due to accelerated accretion resulted from the conversion of debentures series F; (ii) $166 million gain from
the acquisition of TPSCo included in the year ended December 31, 2014; (iii) $56 million costs related to Nishiwaki
Fab cessation of operations recorded in the year ended December 31, 2014; and (iv) gross profit increase of $142
million.
(b) Other non cash financing expense, net is comprised mainly of accelerated accretion and amortization resulted
from the conversion of debentures series F.
(c) Fully diluted earnings per share calculation and presentation are not required under GAAP for periods with GAAP
loss.
(d) Fully diluted share count is comprised as follows: 86 million outstanding shares as of the date of this release, 12
million possible shares underlying options and warrants, 3 million underlying capital notes and 6 million underlying
convertible bonds (unless repayable with cash), totaling to 107 million.
37
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three months ended
Dec. 31,
2015
Sep. 30,
2015
Three months ended
Sep. 30,
2015
Dec. 31,
2015
Three months ended
Dec. 31,
2015
Sep. 30,
2015
non-GAAP
Adjustments (see notes below)
GAAP
REVENUES
COST OF REVENUES
GROSS PROFIT
$254,602
150,322
104,280
$244,181
150,575
93,606
$ —
$ —
39,750 (a)
(39,750)
38,223 (a)
(38,223)
$254,602
190,072
64,530
$244,181
188,798
55,383
OPERATING COSTS AND EXPENSES
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring costs and impairment, net
OPERATING PROFIT
INTEREST EXPENSE, NET
OTHER NON CASH FINANCING EXPENSE, NET (e)
OTHER INCOME (EXPENSE), NET
PROFIT BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE)
14,224
14,518
—
28,742
75,538
(2,366)
—
70
73,242
(1,107)
PROFIT BEFORE NON CONTROLLING INTEREST
72,135
NON CONTROLLING INTEREST
(1,992)
15,777
14,776
—
30,553
63,053
(3,567)
—
(247)
59,239
(1,195)
58,044
(451)
1,480 (b)
960 (c)
(991)
1,449
(41,199)
— (d)
(12,751)
—
203 (b)
572 (c)
—
775
(38,998)
— (d)
(5,312)
—
(53,950)
(44,310)
5,886 (f)
268 (f)
(48,064)
(44,042)
— (g)
— (g)
15,704
15,478
(991)
30,191
34,339
(2,366)
(12,751)
70
19,292
4,779
24,071
(1,992)
15,980
15,348
—
31,328
24,055
(3,567)
(5,312)
(247)
14,929
(927)
14,002
(451)
NET PROFIT
GROSS MARGIN
OPERATING MARGIN
NET MARGIN
BASIC EARNINGS PER ORDINARY SHARE
$70,143
$57,593
$(48,064)
$(44,042)
$22,079
$13,551
41.0%
29.7%
27.6%
$0.88
38.3%
25.8%
23.6%
$0.74
25.3%
13.5%
8.7%
$0.28
22.7%
9.9%
5.5%
$0.18
(a) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $39,064 and $37,491 and stock based compensation costs in
the amounts of $686 and $732 for the three months ended December 31, 2015 and September 30, 2015 respectively.
(b) Includes depreciation and amortization expenses (income) of fixed and other assets in the amounts of $961 and ($395) and stock based compensation costs
in the amounts of $519 and $598 for the three months ended December 31, 2015 and September 30, 2015 respectively.
(c) Includes depreciation and amortization expenses (income) of fixed and other assets in the amounts of $190 and ($410) and stock based compensation costs
in the amounts of $770 and $982 for the three months ended December 31, 2015 and September 30, 2015 respectively.
(d) Non-GAAP interest expense, net includes only interest on an accrual basis.
(e) Other non cash financing expense, net is comprised mainly of accelerated accretion and amortization resulted from the conversion of debentures series F.
(f) Non-GAAP income tax expense includes taxes paid during the period on a cash basis.
(g) Non-GAAP non-controlling interest does not include any adjustments relating to the company’s 51% stake in TPSCo.
38
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES
Three months ended
December 31,
2015
2014
Three months ended
December 31,
2015
2014
Three months ended
December 31,
2015
2014
non-GAAP
Adjustments (see notes below)
GAAP
$254,602
150,322
104,280
$235,289
151,105
84,184
$ —
$ —
39,750 (a)
46,092 (a)
(39,750)
(46,092)
$254,602
190,072
64,530
$235,289
197,197
38,092
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring costs and impairment, net
14,224
14,518
—
13,676
14,623
—
1,480 (b)
960 (c)
(991)
702 (b)
902 (c)
(20,228)
28,742
28,299
1,449
(18,624)
15,704
15,478
(991)
30,191
14,378
15,525
(20,228)
9,675
OPERATING PROFIT
75,538
55,885
(41,199)
(27,468)
34,339
28,417
INTEREST EXPENSES, NET
(2,366)
(7,817)
— (d)
— (d)
(2,366)
(7,817)
OTHER NON CASH FINANCING EXPENSE, NET (g)
OTHER INCOME, NET
—
70
—
15
(12,751)
(17,156)
(12,751)
(17,156)
—
—
70
PROFIT BEFORE INCOME TAX
73,242
48,083
(53,950)
(44,624)
19,292
INCOME TAX BENEFIT (EXPENSE)
(1,107)
1,410
5,886 (e)
(670) (e)
4,779
PROFIT BEFORE NON CONTROLLING INTEREST 72,135
49,493
(48,064)
(45,294)
24,071
15
3,459
740
4,199
NON CONTROLLING INTEREST
(1,992)
(3,575)
— (f)
— (f)
(1,992)
(3,575)
NET PROFIT
GROSS MARGIN
OPERATING MARGIN
NET MARGIN
BASIC EARNINGS PER ORDINARY SHARE
$70,143
$45,918
$(48,064)
$(45,294)
$22,079
41.0%
29.7%
27.6%
$0.88
35.8%
23.8%
19.5%
$0.83
25.3%
13.5%
8.7%
$0.28
$624
16.2%
12.1%
0.3%
$0.01
(a) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $39,064 and $46,082 and stock based compensation costs in the
amounts of $686 and $10 for the three months ended December 31, 2015 and December 31, 2014 respectively.
(b) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $961 and $398 and stock based compensation costs in the amounts
of $519 and $304 for the three months ended December 31, 2015 and December 31, 2014 respectively.
(c) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $190 and $213 and stock based compensation costs in the amounts
of $770 and $689 for the three months ended December 31, 2015 and December 31, 2014 respectively.
(d) Non-GAAP interest expense, net includes only interest on an accrual basis.
(e) Non-GAAP income tax benefit (expense) includes taxes received (paid) during the period on a cash basis.
(f) Non-GAAP non-controlling interest does not include any adjustments relating to the company’s 51% stake in TPSCo.
(g) Other non cash financing expense, net is comprised mainly of accelerated accretion and amortization resulted from the conversion of debentures series F.
39
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES
Year ended
December 31,
Year ended
December 31,
Year ended
December 31,
2015
2014
2015
2014
2015
2014
non-GAAP
Adjustments (see notes below)
GAAP
$960,561
594,610
$828,008
569,102
$ —
160,586 (a)
$ —
195,118 (a)
365,951
258,906
(160,586)
(195,118)
$960,561
755,196
205,365
$828,008
764,220
63,788
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring costs and impairment, net
Merger related costs
58,797
58,608
—
—
49,976
55,057
—
—
2,872 (b)
4,185 (c)
(991)
—
117,405
105,033
6,066
1,865 (b)
3,726 (c)
55,500
1,229
62,320
61,669
62,793
(991)
—
51,841
58,783
55,500
1,229
123,471
167,353
OPERATING PROFIT (LOSS)
248,546
153,873
(166,652)
(257,438)
81,894 (g)
(103,565)
INTEREST EXPENSES, NET
(13,179)
(33,409)
— (d)
— (d)
(13,179)
(33,409)
OTHER NON CASH FINANCING EXPENSE, NET (h)
GAIN FROM ACQUISITION, NET
—
—
—
—
OTHER (EXPENSE), NET
(190)
(140)
(109,930)
(55,404)
(109,930)
(55,404)
—
--
166,404
—
166,404
--
(190)
(140)
PROFIT (LOSS) BEFORE INCOME TAX
235,177
120,324
(276,582)
(146,438)
(41,405) (g)
(26,114)
INCOME TAX BENEFIT (EXPENSE)
(3,469)
1,563
15,747 (e)
23,179 (e)
12,278
24,742
PROFIT (LOSS) BEFORE
NON CONTROLLING INTEREST
231,708
121,887
(260,835)
(123,259)
(29,127) (g)
(1,372)
NON CONTROLLING INTEREST
(520)
5,635
— (f)
— (f)
(520)
5,635
NET PROFIT (LOSS)
$231,188
$127,522
$(260,835)
$(123,259)
$(29,647) (g)
$4,263
BASIC EARNINGS (LOSS) PER ORDINARY SHARE
$3.11
$2.46
$(0.40)
$0.08
Weighted average number of ordinary
shares outstanding - in thousands
74,366
51,798
74,366
51,798
(a) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $158,372 and $194,365 and stock based compensation costs in the
amounts of $2,214 and $753 for the year ended December 31, 2015 and December 31, 2014, respectively.
(b) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $967 and $831 and stock based compensation costs in the amounts
of $1,905 and $1,034 for the year ended December 31, 2015 and December 31, 2014, respectively.
(c) Includes depreciation and amortization expenses of fixed and other assets in the amounts of $764 and $829 and stock based compensation costs in the amounts
of $3,421 and $2,897 for the year ended December 31, 2015 and December 31, 2014, respectively.
(d) Non-GAAP interest expense, net includes only interest on an accrual basis.
(e) Non-GAAP income tax benefit (expense) includes taxes received (paid) during the period on a cash basis.
(f) Non-GAAP non-controlling interest does not include any adjustments relating to the company’s 51% stake in TPSCo.
(g) The differences between the above profit (loss) results for the year ended December 31, 2015 as compared with the comparable period’s results are mainly due
to: (i) $54 million increase in other non cash financing expenses, mainly due to accelerated accretion resulted from the conversion of debentures series F; (ii) $166
million gain from the acquisition of TPSCo included in the year ended December 31, 2014; (iii) $56 million costs related to Nishiwaki Fab cessation of operations
recorded in the year ended December 31, 2014; and (iv) gross profit increase of $142 million.
(h) Other non cash financing expense, net is comprised mainly of accelerated accretion and amortization resulted from the conversion of debentures series F.
40
CONTACT US
info@towerjazz.com
TOWERJAZZ WORLD
HEADQUARTERS
Tower Semiconductor Ltd.
Ramat Gavriel Industrial Park
20 Shaul Amor Avenue
P.O. Box 619
Migdal Haemek 23105 Israel
Phone: +972-4-6506611
Fax: +972-4-6547788
CORPORATE COMMUNICATIONS
& INVESTOR RELATIONS
Phone: +972-4-6047066
E-mail: noit.levi@towerjazz.com
TOWERJAZZ WORLDWIDE
DESIGN CENTER
Bet Shoham
HaMahshev 1
Beit Shoham, 2nd floor
Netanya 42504
Israel
Phone: +972-9-8636361
Fax: +972-9-8652491
WORLDWIDE SALES CONTACTS
TOWERJAZZ U.S. SUBSIDIARIES
Jazz Semiconductor, Inc.
4321 Jamboree Road
Newport Beach, California 92660
USA
Phone: +1-949-435-8000
Fax: +1-949-435-8757
TowerJazz Texas
9651 Westover Hills
San Antonio, TX 78251
USA
Tel: +1 (210) 522-7000
Fax: +1 (210) 522-7703
TOWER SEMICONDUCTOR
USA INC.
North American Sales
2570 N. 1st. Street, Suite 480
San Jose, CA 95131
USA
Phone: 1-408-770-1324
Fax: 1-408-770-1321
THE NEW COMPANY ESTABLISHED
BY TOWERJAZZ AND PANASONIC
Hokuriku region, Japan
TowerJazz Panasonic Semiconductor Co.,
Ltd. (TPSCo)
800 Higashiyama, Uozu City,
Toyama 937-8585
Inquire about our foundry service:
E-mail: Info_Japan@towerjazz.com
Phone (Japan): +81-3-5419-3049
For other inquiries:
E-mail: info@tpsemico.com
Phone (Japan): +81-765-22-5521
Please call between 9 a.m. and 5 p.m. (JST)
during weekdays. We will be closed on national
holidays, New Year holidays,and other company
holidays.
Fax: +81-76-522-3161
www.tpsemico.com
Country
Phone
E-mail
Brazil .....................................................................+5511 3586-5114/+5511 9114-5737 ...........................Info_Brazil@towerjazz.com
China.....................................................................+86-21-64738476 ........................................................Info_China@towerjazz.com
France ...................................................................+33-141-442065/+33-699-411515 ..............................Info_Europe_Rep@towerjazz.com
India ......................................................................+91-80-2527-2030 ......................................................Info_India_Rep@towerjazz.com
Japan ....................................................................+81-3-5419-3049 .........................................................Info_Japan@towerjazz.com
Korea ....................................................................+82-31-628-4830-1 .....................................................Info_Korea@towerjazz.com
Middle East/Israel .................................................+972-4-650-6077 ........................................................Info_ME@towerjazz.com
Taiwan ...................................................................+886-920-037-678 ......................................................Info_Taiwan@towerjazz.com
United Kingdom and Europe .................................+49-172-8989667 ........................................................Info_UK&Europe@towerjazz.com
UK/Ireland/Scandinavia .........................................+44-1732-844-611 ......................................................Info_UKIS_Rep@towerjazz.com
USA .......................................................................+1-408-770-1324 .........................................................Info_West@towerjazz.com
Info_East@towerjazz.com
Info_A&D@towerjazz.com
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You can also find us on:
San Jose, CA, USA
Sales and Support Office
Migdal HaEmek, Israel
8” Fab & 6” Fab
San Antonio, TX, USA
8” Fab
Virginia, USA
Sales and Support Office
UK & France
Sales Rep Offices
Seoul, South Korea
Sales and Support Office
Shanghai, China
Sales and Support Office
Nagaokakyo, Japan
TSJ HQ
Sales and Support Office
Tokyo, Japan
Sales and Support Office
Hsinchu, Taiwan
Sales and Support Office
India
Sales Rep Office
Netanya, Israel
Worldwide Design Center
Arai, Japan
8” Fab
Newport Beach, CA, USA
8” Fab
Brazil
Sales Rep Office
Tonami, Japan
8” Fab
Uozu, Japan
12” Fab