2017 ANNUAL REPORT
Corporate and Business Overview
NASDAQ & TASE: TSEM
TOWERJAZZ 2017 ANNUAL REPORT
Corporate and Business Overview
TABLE OF CONTENTS
5
6
Chairman Letter
to Shareholders
CEO Letter
to Shareholders
4
Opening
10
Corporate Overview
12
Financial Overview
14
Global Operations
18
Radio Frequency &
High Performance Analog
20
CMOS Image Sensors
22
Power Management
26
Transfer, Optimization
and Development
Process Services
27
Research and
Development
28
Corporate Social
Responsibility
VISION
To be the world leader in specialty foundry solutions
as measured by our customers, employees and investors.
MISSION
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.
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
Emphasize
Collaboration
and Innovation
Focus on
the Right
Knowledge,
Skills and
Attitude
8
Leadership Team
17
Technology and Market
Leadership
24
Rising Markets and
Emerging Technology
Offering: Automotive
and Sensors
30
Fourth Quarter and
Fiscal Year 2017
Financial Results
2
3
With record business, strategic and financial achievements,
TowerJazz is proud to summarize
2017 as a successful year with
substantial value creation.
The Company continues to proudly lead
the specialty analog foundry landscape, enhancing its position
as the foundry of choice for the technology megatrends
driving the world.
In 2018 and beyond,
TowerJazz’s focus is to converge
upon and optimize the great
opportunities that lie ahead,
continuing to create value for all its stakeholders -
customers, shareholders, employees and partners.
CHAIRMAN LETTER TO SHAREHOLDERS
Dearest Shareholders and Friends,
What a year! The board and I are so pleased with 2017 achievements; the culmination of
tactics having brought a multi-year strategic plan to fruition. Our thanks to the employees
and the management team for their outstanding performance and contribution, as well as
appreciation to our shareholders for believing in the Company.
We posted industry leading year-over-year organic growth of over 20%, building upon the
three megatrends in the industry, namely seamless connectivity, power efficiency and smart
sensing. In each of these areas, we have demonstrated and publicly released substantial
achievements. We also made significant progress, as previously announced, with new strategic
initiatives in China.
Looking ahead, and building upon the strong foundations we have established, we possess the
right resources and capabilities to aim higher. As a team, we will continue to push TowerJazz
towards further growth and greater heights. We continue to eye and pursue strategic and value
add opportunities that are now available to us due to our strong business and financial position.
As the Board and I look forward to 2018 and beyond, we are ever more confident in the
Company’s abilities to continue to structure and attain even higher goals. As always, our focus
is to create and realize value for you, our very loyal shareholders, who continue to support
our efforts.
Sincerely,
Amir Elstein
Chairman of the Board
BOARD of DIRECTORS
Mr. Amir Elstein
Chairman of the Board
Mr. Yoav Z. Chelouche
Director, Chairman of the Audit Committee
Mr. Ilan Flato
Director, Chairman of the Compensation Committee
Mr. Kalman Kaufman
Director, Chairman of the Nomination Committee
Ms. Iris Avner
Director
Mr. Russell Ellwanger
Director, CEO
Ms. Dana Gross
Director
Mr. Rami Guzman
Director
Mr. Alex Kornhauser
Director
Ms. Rony Ross
Director
4
5
“We continue,
as a team, to
be committed
and passionate
towards
creating
value. We are
confident in the
strength and
capabilities of
the Company.”
CEO LETTER TO SHAREHOLDERS
Dear Shareholders, Customers, Partners and Employees,
2017 was an exceptional year for TowerJazz, not only in achieving record results, but also
having created strong foundations for future growth.
Our Achievements
During 2017, we spotlighted our corporate theme of
“full circle value creation.” This was driven by three
main fundamentals: (1) our technology leadership,
providing a wide range of differentiated and advanced
specialty analog solutions; (2) our market leadership,
remaining well-positioned in rapidly growing markets,
while maintaining long-term customer relationships
and roadmap alignment; both of which lead to (3) our
proven analog business model, as demonstrated by
our continued business and financial growth.
Our 2017 performance is strong evidence of having
achieved our goal of creating and delivering value
to our customers through focusing on their needs
to create mutual success. The Company presented
outstanding financial results with record revenues of
$1.387 billion, record EBITDA of $425 million, record
net profit of $298 million and record free cash flow
of $191 million. In addition, we announced multiple
new partnerships and technology offerings, among
which are some major agreements in China. Our
performance and these achievements have created
a remarkable platform for the realization of further
growth opportunities.
Our Focus
An essential part of continued success is to
understand what truly is happening, in real-time,
in order to be able to respond properly and rapidly.
Gemba is a Japanese concept, referring to “the place
where value is created.” In manufacturing, it means to
be at the production floor, where problems are visible
and relevant data is accessible, and hence where
valuable learning and problem-solving processes
can be driven.
In managing a company, it can relate to “walking
among the people,” receiving and providing valuable
insights through exposure to opportunities for
growth and improvement. This can be done both
externally and internally:
• External – focus on customers: we establish
and maintain relationships at all levels, holding
formal activity reviews on a regular basis, while
also focusing on frequent informal updates. This
enables us to understand where issues may or
already have occurred, and then to provide quick
solutions and respond to the on-going needs of
our customers.
“Our focus for this year – being at the
right place (Gemba) and taking the right
actions to maximize value creation.”
• Internal – focus on employees: having a strong
executive team that can drive and execute
short and long-term strategies, while in parallel
identifying and developing young stars with
high impact and high potential who can drive
the business towards new heights. In addition,
it is essential to hold regular reviews with a
cross-section of presenters and “walk in the
hallways,” to enable informal information flows.
This provides additional insights and better
understanding of challenges, providing all levels
of management increased capability to address
issues in a timely manner.
The most important part is to always listen, evaluate,
act and “close the circle.” This energizes cycles
of learning, at all levels, and generates real time
actions. This is our focus for this year – being at the
right place (Gemba) and taking the right actions to
maximize value creation.
Forthcoming
We continue, as a team, to be committed and
passionate towards creating value. We are
confident in the strength and capabilities of the
Company based on our achievements, technology
offerings, market positioning, long-term customer
and partner relationships, financial position
and our devoted worldwide employee base. We
thank you, our shareholders, for your continued
support. We are looking forward to continuing
our rewarding journey together towards even
greater mutual successes.
Sincerely,
Russell Ellwanger
TowerJazz Chief Executive Officer
TPSCo Chairman of the Board
6
7
LEADERSHIP TEAM
Executive Management
Business Unit General Management
Dr. Itzhak Edrei
President
Rafi Mor
Chief Operating Officer
Guy Eristoff
Chief Executive
Officer, TPSCo
Dr. Marco Racanelli
Senior Vice President
and General Manager of RF/
HPA and US A&D Business
Groups, Newport Beach
Site Manager
Dr. Avi Strum
Senior Vice President
and General Manager,
CMOS Image Sensor
Business Unit
Zmira Shternfeld-Lavie
Senior Vice President
of Process Engineering R&D
General Manager of TOPs
Business Unit
Shimon Greenberg
Vice President and
General Manager of Power
Management and Mixed-
Signal Business Unit
Worldwide
Sales
Investor
Relations
Gary Saunders
Senior Vice President of
Worldwide Sales
Noit Levy-Karoubi
Vice President,
Investor Relations and
Corporate Communications
TowerJazz’s leadership team brings together variegated backgrounds
and experiences in technology, leadership and success formulations,
enabling a keen eye to identify and “light tower” the best core
competencies within a vast culturally diverse global organization.
This has yielded the leading global specialty foundry with value
propositions towards an ever growing market, that no other single
foundry can provide.
Oren Shirazi
Chief Financial Officer
Senior Vice President
of Finance
Nati Somekh
Senior Vice President
Chief Legal Officer and
Corporate Secretary
Ilan Rabinovich
Worldwide Senior Vice
President of Quality
and Reliability
Dalit Dahan
Senior Vice President of
Human Resources and
Information Technology
Yossi Netzer
Senior Vice President
of Corporate Planning
Russell Ellwanger
Chief Executive Officer
8
9
CORPORATE OVERVIEW
THE GLOBAL SPECIALTY
FOUNDRY LEADER
With a proven business model and technology leadership within multiple
growth markets, TowerJazz has consistently presented strong business,
operational and financial performance. Focusing on long-term customer
relationships, while gaining new and exciting business, TowerJazz is
well-positioned to fulfill current and future technology market needs,
while providing its customer with full circle value creation.
TowerJazz, the global specialty foundry leader, manufactures advanced analog
integrated circuits for a diversified and strong customer base in various growing
markets such as consumer, automotive, medical, industrial, and aerospace & defense.
Deeply rooted in proven technologies, the Company continues to drive innovation
within silicon rather than solely by technological node shrinkage. TowerJazz
specializes in customized analog solutions for differentiated products and offers
leading edge specialty process technologies including Radio Frequency (RF),
High Performance Analog (HPA), integrated Power Management (PM), CMOS
Image Sensors (CIS), Mixed-Signal/CMOS, and Micro-Electro-Mechanical Systems
(MEMS) capabilities. In addition, the Company provides world-class design
enablement and Transfer Optimization and development Process Services (TOPS).
TowerJazz is geographically and culturally diverse with broad and profound
experience in developing and manufacturing many different types of technologies.
As the Company continues to expand its global presence and mature its
operations, it leverages “local” best-in-class performance into worldwide
standards, providing additional capabilities that allow the Company not just
to meet, but to exceed its customer expectations.
TowerJazz pursues excellence in all aspects of its business by pullulating
industry expertise and cultivating a collective culture of quality,
innovation, and trust.
To ensure business continuity and operational flexibility, TowerJazz operates seven
manufacturing facilities in three geographic regions: two fabs (150mm and 200mm)
located in Migdal Haemek, Israel, two 200mm fabs in the US (one in Newport
Beach, California, and one in San Antonio, Texas), and three additional fabs (two
200mm and one 300mm) through TowerJazz Panasonic Semiconductor Co., Ltd.
(TPSCo) located in Japan. The Company has also announced the establishment
of an eighth manufacturing facility in Nanjing, China, as part of a partnership
with Tacoma Technology, Ltd.
TowerJazz remains focused on enhancing its strong financial foundation, enabling the
Company to pursue and realize its goals and emerging opportunities. By expanding
its advanced technology offerings and capabilities, manufacturing capacity and
global reach, TowerJazz continues its path of value creation, realizing market and
technology leadership, enhancing its position as the global specialty foundry leader.
TOWERJAZZ AT A GLANCE
The global specialty foundry leader, manufacturing
advanced analog integrated circuits for more than 300 customers worldwide
in growing markets such as automotive, consumer, medical, industrial and
aerospace & defense.
Offering the widest range of customized analog
technologies to provide cutting edge market solutions, enabling
a diversified, strong and continually growing customer base. Aligned
with leading customers’ technology roadmaps to ensure long-term
business relationships.
Continuous focus on margin expansion and free cash flow generation;
Strong financial foundation, enabling continuous realization
of growth and value-added opportunities.
Seven worldwide manufacturing facilities, fulfilling
growing customer demand and providing capacity assurance, operational
flexibility, and dual-sourcing capabilities, with an eighth in latter stages
of build out.
Over 5,500 worldwide highly devoted, talented and
skilled employees with broad knowledge, in-depth expertise and
wide-ranging experience.
10
11
FINANCIAL OVERVIEW
2017 was a remarkable year, demonstrating
continuous progress and success for TowerJazz.
With a strong business and operating model, the
Company again realized top and bottom line quality
growth combined with cash generation and strong
financial metrics.
In 2017, TowerJazz broke multiple financial records,
achieving its highest annual revenues, EBITDA,
gross profit, operating profit, net profit and free cash
flow, among other records. The company presented
incremental net profit, robust free cash flow generation
and a strong balance sheet.
Main financial achievements in 2017:
RECORD REVENUE
Record full year revenues
of $1.387 billion;
Up 11% year-over-year
INCREASED MARGINS
Increase in gross and operating
margins - gross profit up from
$303 million to a record of
$354 million; operating profit
up from $175 million to a
record of $220 million
RECORD EBITDA
Record $425 million in
EBITDA, reflecting 31%
EBITDA margin;
Up 16% year-over-year
RECORD NET PROFIT
Record net profit of $298
million representing net
margin of 21%, resulting in
$3.08 and $2.90 basic and
diluted earnings per share,
respectively
RECORD CASH GENERATION
Generated record free
cash flow of $191 million
as compared with $118
million in 2016
Main Financial Parameters Summary
All data in millions of dollars
Total Revenue
EBITDA
Net Profit (Loss)
Net Profit (Excluding one-time items*)
Cash from Operations
Free cash flow
(Cash from operations less Cap-Ex investments)
Shareholders’ Equity
Total Assets
2017
$1,387
$425
$298
$203
$356
$191
$1,030
$1,674
2016
$1,250
$367
$204
$154
$327
$118
$683
$1,380
2015
$961
$248
($30)
$51
$170
$5
$386
$965
* For 2017: $82 million income tax benefit resulting from Israeli deferred tax asset realization following valuation allowance
release and $13 million income tax benefit related to US tax reform
* For 2016: $50 million net gain from the San Antonio factory acquisition from Maxim
* For 2015: $81 million non-cash financing expense, net associated with Bonds Series F accelerated conversion
The financial results of 2017 provide solid evidence for
the strength and execution of TowerJazz’s business
strategy and financial focuses.
The Company constantly takes action to enhance and optimize its
production mix using best manufacturing capabilities and geographic
capacity flexibility, enabling greater margins and stronger free cash
flow generation.
Revenues ($ Millions)
EBITDA ($ Millions)
1,387
425
1,250
367
2016
2017
2016
2017
Net Profit ($ Millions)
Net Profit ($ Millions)
(Excluding one time items*)
298
203
204
154
2016
2017
2016
2017
Free Cash Flow ($ Millions)
Shareholders’ Equity ($ Millions)
191
1,030
683
118
2016
2017
2016
2017
“As 2018 begins,
we look forward
to enhancing
our industry and
financial position,
focusing on our
long-term value
and growth
strategy, while
continuing to
create and sustain
value for our
shareholders.”
Oren Shirazi
Chief Financial Officer
Senior Vice President
of Finance
12
13
GLOBAL OPERATIONS
TowerJazz continues to expand its broad manufacturing capabilities to enhance capacity
utilization and flexibility, serving its ever-growing customer demand.
TowerJazz provides high quality manufacturing
in its seven worldwide fabrication facilities
(fabs). By continuously focusing on operational
per formance, manufacturing qualit y, and
corporate cost structure, TowerJazz is able to
better serve its customers while enhancing its
financial corporate performance. The Company
drives operational excellence and optimization
by reducing complexity, improving efficiency
and effectiveness of processes, procedures and
systems, maximizing transparency, shortening
lead times and minimizing the cost of operations
to satisfy customer needs.
Manufacturing Technology and Quality
TowerJazz is constantly adding process capabilities
into its fabs to support new and cutting edge
advanced and specialized technologies. In addition,
the Company cross qualifies major process flows
between fabs to increase operational flexibility and
geographic diversity.
Focusing on the highest of standards, TowerJazz has
attained several ISO certifications including: Quality–
ISO9001; Environmental–ISO14001; IP Security–BS/
ISO27001; Safety– OHSAS 18001; and Automotive–
ISO/TS 16949.
Green initiatives
In 2017, TowerJazz broadened its presence into renewable energy and green initiatives. Several
key projects enable reduction in water and electricity consumption. Solar panels are currently
installed at its headquarters in Migdal Haemek, Israel. Other initiatives at TowerJazz facilities include
installing smart devices that regulate power usage, upgrading chillers, replacing the cooling tower
and replacing neon light bulbs with LED bulbs. The total electricity savings per year is 20 GWh/
year and is equivalent to yearly electricity consumption of about 1,600 private households or 16
million pounds of coal burned. The total water savings is equal to the annual water consumption
of a town with a population of 2,100 people.
“TowerJazz
continues to focus
on high asset
utilization while
maintaining fab
performance.
Enhanced
manufacturing
capabilities, top
quality standards
and geographical
flexibility extend
our leading
position as the
specialty foundry
of choice.”
Rafi Mor
Chief Operating Officer
Worldwide Manufacturing Facilities
TowerJazz operates seven manufacturing facilities in three geographic regions,
providing global capacity assurance and flexibility: two fabs located in Migdal
Haemek, Israel, one fab in Newport Beach, California, USA, one fab in San
Antonio, Texas, USA, and three factories in the Hokuriku region of Japan
through TowerJazz Panasonic Semiconductor Company (TPSCo), a company
established with Panasonic in March 2014.
ISRAEL
Migdal Haemek
ISRAEL
Migdal Haemek
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
USA
Newport Beach, CA
USA
San Antonio, TX
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
JAPAN
Arai
JAPAN
Tonami
JAPAN
Uozu
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, Power
65nm to 45nm
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Full Circle Value Creation
Fastest
growing
foundry in the
world with
proportional
growth in
all financial
metrics
Proven
Analog
Business
Model
Technology
Leadership
Wide range of
advanced and
differentiated
specialty
analog
offerings
Market
Leadership
Well-positioned in the fastest
growing markets with long-term
customer relationships
and roadmap alignment
TECHNOLOGY AND
MARKET LEADERSHIP
TowerJazz provides enhanced and comprehensive technology solutions for
various dominant and growing markets, positioning the Company at the
forefront of the most innovative technologies.
Best-in-class specialty technology platforms are the core of TowerJazz’s
competitiveness and value proposition for markets such as connectivity,
power management, CMOS image sensors, among others, enabling TowerJazz
to achieve continuous growth. This, complemented by vast expertise in
process development and design services, empowers long-term customer
relationships and close roadmap alignment. The Company is confident
in its ability to further expand its leading capabilities in these key, and
additional segments, ensuring future success for TowerJazz, its customers
and its partners.
The Company is continuously looking towards new horizons of disruptive
technologies, driving R&D activities and developing a wide-range of offerings
to best serve rising markets such as automotive and sensors, presenting
many new opportunities for TowerJazz across all its business units.
RADIO FREQUENCY/
HIGH PERFORMANCE
ANALOG
POWER MANAGEMENT/
MIXED-SIGNAL
CMOS IMAGE SENSOR
AEROSPACE AND
DEFENSE
TRANSFER,
OPTIMIZATION &
DEVELOPMENT
PROCESS SERVICES
AUTOMOTIVE
MICRO-ELECTRO-
MECHANICAL SYSTEMS
DESIGN ENABLEMENT
“Committed to
maintaining our
prominent position
as the global
specialty foundry
leader, we are
focused on strong
alliances with
our customers, to
provide advanced
technology
solutions for their
current and future
technology and
manufacturing
needs.”
Dr. Itzhak Edrei
President
2017 Main Announcments
February 23
UCSD and TowerJazz
Demonstrate Best-in-Class
5G Mobile Transmit-Receive
Chips with Greater than 12
Gbps Data Rates
February 28
TowerJazz and Cavendish
Kinetics Deliver High
Volume RF MEMS with
Unprecedented Reliability
March 13
TowerJazz Expands Support
for its Fast Growing Base
of Chinese Customers
with Leading SiGe
BiCMOS Technologies for
Wireless and Wireline
Communication Systems
March 20
TowerJazz Announces H5:
a Leading 300GHz SiGe
Technology Optimized for
400GbE Communications
March 23
TowerJazz Announces
New Foundry Silicon
Photonic (SiPho)
Process Targeting
Optical Transceiver
Electronics Market
March 27
TowerJazz and TPSCo
Release Enhanced
up to 200V 180nm
BCD on SOI Power
Management Process
April 12
TowerJazz and Aisin
Seiki Announce Mass
Production of New
Generation Automotive
Body Products
16
August 9
TowerJazz to Provide
Advanced RF and High
Performance Analog
Solutions for the Fast
Growing Automotive
Analog Device Markets
August 14
TowerJazz Announces
DENSO Corporation
utilized its Advanced
0.18um SiGe Technology
to Develop a 24GHz Rear
and Side Radar Sensor,
used by Toyota
August 21
TowerJazz and Tacoma
Announce a Partnership
for a New 8-inch
Fabrication Facility in
Nanjing, China
September 14
TowerJazz Announces
Release of its Advanced
5V 65nm CMOS and Low
Voltage Power Process
Addressing LED Lighting,
Analog Switch, DC/
DC Converter and Load
Switch Applications
September 27
TowerJazz and Crocus
Expand Presence in
Magnetic Sensors
Market through
Successful Licensing of
Crocus’ IP and Volume
Manufacturing by
TowerJazz
October 30
TowerJazz and Yuanchen
Microelectronics
Announce Partnership
for Backside Illumination
(BSI) Manufacturing in
Changchun, China
November 20
TowerJazz Broadens
Green Initiatives in
its Specialty Analog
Foundry Business by
Increasing Renewable
Energy Sources
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RADIO FREQUENCY &
HIGH-PERFORMANCE ANALOG
TowerJazz continues to play a substantial role as a leading RF manufacturer, maintaining long-
term relationships and growing its business with the market’s top players.
TowerJazz continues to offer and enhance the
most prominent RF platforms in the industry,
providing customers with advanced and unique
RF (radio frequency) and HPA (high performance
analog) technologies, addressing the ever-
growing needs and demands for seamless
connectivity. This includes:
• RF SOI for smartphone and IoT front-end modules
with best-in-class Ron x Coff (Sub-100fs) enabling
RF switches with the lowest insertion loss and
best linearity and smartphones with improved
reception, battery life and data rates.
• RF SiGe (silicon-germanium) for low-noise-
amplifiers (LNAs) and power amplifiers enabling
GaAs-like performance at silicon-based cost
while enabling integration of a full front-end
module on a single chip (PA, LNA, PA controller,
MIPI interface, switch).
• High Performance SiGe offering speeds at
300GHz enabling today’s fastest optical transceivers
operating at 100 to 400Gb/s for data centers and
fiber optic networks.
• New Silicon Photonic (SiPho) offering to complement
the Company’s high performance SiGe and enable
integration of optical waveguides, receivers and
modulators for data center fiber optic links.
With the best performing SiGe and RF SOI (Silicon-
On-Insulator) technology, as well as a long legacy
of accurate models and process design kits (PDKs),
TowerJazz enables its customers an unmatched
rate of first time silicon success.
Providing strong know-how and IP, together with the
highest manufacturing capabilities and expertise,
drives market leaders to create long-term roadmap
alignment with TowerJazz to ensure their future growth.
Main applications
Mobile data
communications
The mobile market consists of
the multi-billion unit per year
smartphone market as well as
the even larger emerging IoT
market. Here, TowerJazz supplies
switches, low-noise amplifiers,
and power amplif iers that
enable higher speed wireless
communication.
Infrastructure
Automotive
TowerJazz estimates to own over
60% market share of SiGe fiber
optic front-end components, such
as trans-impedance amplifiers,
laser drivers and clock and data
recovery circuits that enable
high-speed fiber optics data
connections throughout networks,
as well as in data and cloud
computing centers.
TowerJazz’s SiGe technologies
are enabling state of the art
radar and LiDAR sensor solutions
for the rapidly growing multi-
billion dollar Advanced Driver
Assistance Systems (ADAS)
market, establishing strong
partnerships with market leaders.
Value creation in 2017
The primary strategic achievements of 2017 included:
• Launched H5, a leading SiGe technology that is now part of TowerJazz’s
high performance SiGe Terabit platform enabling next-generation data
communications in networks and data centers supporting the dramatic
increase of wireline data traffic. Announced key design wins with Broadcom,
a leading designer, developer and global supplier of a broad range of digital
and analog semiconductor connectivity solutions.
• Qualified RF SOI platform in multiple manufacturing sites, offering increased
capacity to meet growing customer demand.
• Enhanced advanced automotive offering with leading technology for the complex
requirements of ADAS and autonomous driving in the wireless connectivity and
automotive radar markets; announced strong partnership with Denso, entering
production on RF radar sensors for the Toyota Camry released in North America.
• Launched a new foundry Silicon Photonic (SiPho) process. This new SiPho
offering adds new serviceable content to the optical fiber market already
served by the Company’s high performance SiGe technology in data and
cloud computing centers.
2018 Opportunity Leadership Realization
The RF & HPA business unit is investing heavily to capture several emerging
opportunities, the most significant being the advent of 5G for higher wireless
data rates. 5G will increase the RF content in smartphones and improve
performance, benefitting from the Company’s most advanced RF SOI and SiGe
technologies. The higher data rates will also provide an infrastructure growth
boost which TowerJazz will serve with its High Performance SiGe and new
SiPho platforms. Beyond 5G, automotive sensors will continue to provide new
business opportunities as advanced safety systems give way to autonomous
vehicles in the future. TowerJazz will continue to expand its strong offering
and presence within these rapidly growing markets.
“The insatiable
appetite for
mobile data
ensures a bright
future for our
RF business as
we have top-tier
customers in
mobile platforms,
data infrastructure,
and automotive
applications
that are poised
to win with us,
as 5G and other
next-generation
technologies
take hold.”
Dr. Marco Racanelli
Senior Vice President
and General Manager
of RF/HPA and US A&D
Business Groups, Newport
Beach Site Manager
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CMOS IMAGE SENSOR TECHNOLOGY
TowerJazz provides a high-end, value-added CMOS image sensor (CIS) platform, specially
customized per specific product, application needs and customer requirements.
TowerJazz’s silicon proven leading specialty CIS
platform is tailored for the benefit of its customers
in numerous leading markets. The Company’s
worldwide recognized, best-in-class offering
meets the growing demand for the advanced
capabilities of CIS technology for optical sensors
used in high-end photography, industrial, medical,
and automotive applications, as well as consumer
applications that include security cameras and 3D
imaging for gesture recognition and augmented
reality (AR) markets. In addition, new applications
such as drone photography, biometric identification,
and event driven sensors rely on current and future
CIS innovation.
The Company’s advanced CIS technology is being
offered in its various manufacturing facilities,
including 8 inch and 12 inch platforms, allowing
customers both capacity flexibility and long-term
technology roadmap alignment.
Opportunity Leadership Realization for 2018
TowerJazz’s leading CIS expertise and well-proven
reputation strongly positions the Company to take
advantage of this anticipated high growth market.
TowerJazz develops and provides advanced solutions
while focusing on new developments and innovative
solutions for multiple emerging segments such as:
(1) an improved LiDAR technology, allowing higher
sensitivity in near-infrared for the automotive market;
(2) development of high-end DSLR technology, in
collaboration with a leading player in this field, for
both front-side illumination and stacked wafers
(backside illumination) for the high-end photography
market; (3) next generation family of sensors with
multiple customers for industrial applications, based
on the Company’s newly developed, state of the art
global shutter pixels, and (4) entering into the new
rising market of augmented reality (AR).
Value creation in 2017
The primary strategic achievements of 2017
include:
• Backside illumination: Partnership with YuanChen
Microelectronics (YCM) for backside illumination
(BSI) manufacturing in Changchun, China provides
the BSI process segment for CIS 8 inch wafers
produced by TowerJazz, serving its worldwide
customers. In addition, TowerJazz developed BSI
and stacked wafers technology on 12 inch wafers
in its Japanese facility (TPSCo) serving as the next-
generation platform for the high-end photography
and high-end security markets.
• A 2.8um global shutter pixel advanced offering on
a 110nm platform for the industrial sensor market,
the smallest global shutter pixel in the world,
already in the manufacturing stage. In addition,
a 2.5um global shutter pixel in development on
the Company’s 65nm 300mm platform with
several leading customers, allowing higher sensor
resolution for a given sensor size, and enabling
TowerJazz to maintain its market leadership.
• SPAD (Single Photon Avalanche Diode) state of
the art technology and ultra-fast global shutter
pixels for automotive LiDARs based on ToF (Time
of Flight) principles, answering the automotive
market’s needs. The Company has engaged with
several customers in the development of their
automotive LiDAR, and expects to be a major
player in this market in the coming future.
Main applications
Automotive
ADAS and autonomous driving are propelling the
automotive market to increased CIS usage. TowerJazz’s
advanced technology is used for high dynamic range
CMOS camera sensors to perform wide ranging tasks
such as road signs detection, lane departure warning, and
parking assist. TowerJazz also offers near-infrared enhanced
imaging used in dark conditions or in active sensing that
uses near infrared pulsed lasers as a synchronized light
source, and LiDAR, a detection system using a laser light
radar providing much finer resolution than a radar system,
allowing 3D fine mapping of the surrounding area.
Industrial/Machine Vision
Driven by the need for automation of factories, as well
as household intelligent robots, 2D barcode readers,
traffic control cameras and more, the industrial/machine
vision market requires a very fast, high frame rate,
global shutter operation, provided by TowerJazz’s state
of the art global shutter pixel technology.
High-end Photography and
Cinematography
TowerJazz is a leader in these markets, with sensors
used in many films including Oscar winners, and is
growing its market share in the still photography area
of DSLR and Mirror Less (ILC) cameras, based on its
superb technology on the 65nm process node.
Medical and Dental X-ray
TowerJazz works with leading customers in the medical
and dental X-ray markets using its unique stitched
technology for up to one die per wafer (150mm x
125mm) that can be tiled into large panels to meet the
specific requirements of these applications.
3D sensing and Augmented Reality/
Virtual Reality (AR/VR)
These areas are viewed as extremely fast growing
for CMOS image sensors. TowerJazz’s expertise in
global shutter pixel technology has enabled unique,
near-infrared sensitive global shutter pixels that are
required for this market segment.
Security
The need for cameras at every street corner and in
every building is increasing very fast and the cameras
are moving to HD, Full HD and QHD (4Mp). TowerJazz
uses its state of the art pixel technology to provide
the best security sensors in the market.
“Through R&D,
innovation and
partnership with
market leaders,
we are in a strong
position to grow
our share of
the anticipated
high growth CIS
markets of next-
generation global
shutter technology
for industrial
sensors, backside
illumination and
stacked wafers
for high-end
photography,
and special
pixel technology
for automotive
applications.”
Dr. Avi Strum
Senior Vice President
and General Manager,
CMOS Image Sensor
Business Unit
20
21
POWER MANAGEMENT & MIXED-SIGNAL CMOS
TowerJazz’s advanced power management offering provides a unique, modular and flexible
technology platform achieving best-in-class efficiency and performance with low die size, enabling
customers to best compete across multiple market segments.
The Company provides an extensive and competitive
technology offering for a wide range of operating
voltages and devices with specific features developed
to meet customers’ precise requirements, including:
• A novel 200V SOI technology which provides
superior performance for a broad range of analog
and power high voltage industrial and automotive
applications such as motor drivers, home and
industrial appliances, battery management systems,
electric vehicles (EVs), ultra-fast GaN drivers,
industrial motor controllers, and many more.
• Low voltage power management (up to 5V)
for widely used products such as LED drivers,
fingerprint sensors and multiple other ICs. These
types of products, which are highly sensitive
to cost, can now benefit from the unique
advantages of the Company’s 65nm 300mm wafer
process platform in Uozu Japan, that includes
low mask count and small design rules which
drive significantly smaller die size, meeting this
market’s predominant need for a better cost
structure from which both the company and
the customers benefit.
• A recently developed drain isolation that is well-
suited for the automotive market toward hybrid
48V architecture which is expected to cover ~50%
of hybrid cars by 2025. In addition, TowerJazz offers
a unique process platform for battery management
systems that can sustain up to 140V on bulk wafers
that is already being used by a leading electric
vehicle manufacturer. This process platform is in mass
production in two of TowerJazz’s manufacturing sites.
TowerJazz’s worldwide design enablement services
provide fast and accurate support for its customers’
needs, helping them to achieve first-pass silicon
success for faster time to market.
Through close partnerships and roadmap
alignment with market leaders, TowerJazz
provides distinctive value enabling its customers
to best compete across multiple growing
market segments.
LED lighting, analog switch, DC/DC converter
and load switch applications, offering enhanced
RDS(on) efficiency with an attractive die cost. This
technology is based on TowerJazz’s automotive
300mm 65nm process platform manufactured in
its Uozu, Japan facility and supports both best-
in-class quality and manufacturing cycle time.
Value creation in 2017
The primary strategic achievements of 2017 included:
• Significantly expanded power management offering
by wider coverage of voltages and capabilities,
increasing the Company’s addressable market. The
power management platform is already available
in two of TowerJazz’s worldwide manufacturing
facilities and is currently in final stages of
qualification in an additional manufacturing site.
• Newly developed state of the art BCD (Bipolar-CMOS-
DMOS) SOI (Silicon-On-Insulator) power management
technology platform supporting applications with
up to 200V breakdown voltage, providing superior
performance for a significant number of high voltage
end applications within the automotive and industrial
power management IC markets.
• Released advanced 5V 65nm CMOS and low
voltage power process platform addressing
Opportunity Leadership Realization for 2018
The Company is investing in two main directions: (1) development of its 65nm
BCD on 300mm wafers to offer the most competitive platform with better
efficiency and cost structure, for voltages of up to 16V, and (2) expanding its
presence in the automotive market, with its drain isolation offering and 200V
SOI platforms. Those new developments, together with best-in-class RDS(on),
wide voltage coverage up to 200V, a smart and flexible process design kit,
design support for first time silicon success, and more, well-positions TowerJazz
to continue increasing its market share.
Main Applications
Consumer & Communication
TowerJazz addresses the power requirements of
mobile phones, laptops, set top boxes, drones,
vacuum robots and more. In these markets, the
two main needs are cost and battery life time.
Using its leading low RDS(on) and high frequency
LDMOS, TowerJazz offers smaller die size which
enables a lower cost solution, and higher power
efficiency which improves battery life.
Industrial
TowerJazz provides solutions for the industrial
market including cordless power tools, motor
drivers, load switches and DC-DC converters.
Most of these applications require customized
solutions and must support high voltages of up
to 200V breakdown. TowerJazz addresses these
needs with multiple platforms, low RDS(on), drain
isolation and SOI platforms.
Automotive
Driven by the increasing amount of power
electronic devices in each new car, this market
is fast growing. TowerJazz supports the new
requirements for 48V voltages in hybrid and EVs
and the need for lower cost power management
solutions in the 5V automotive domain. These
needs are addressed with 65nm, drain isolation and
200V SOI platforms with attention to the aggressive
operating conditions and quality requirements of
the automotive market.
“TowerJazz’s
power
management
offering is one of
the broadest and
most competitive
in the foundry
arena – from
consumer to
industrial to
automotive
markets, we
address a wide
range of operating
voltages and
applications. Our
customers well
recognize the
unique value
we offer.”
Shimon Greenberg
Vice President and
General Manager of Power
Management and Mixed-
Signal Business Unit
22
23
RISING MARKETS AND EMERGING TECHNOLOGY
OFFERINGS: AUTOMOTIVE AND SENSORS
TowerJazz’s commitment for ongoing technology development ensures success in continuously
providing advanced solutions for existing and future market trends.
Automotive
The automotive market displays a nearly endless span of development
opportunities that utilize semiconductor-based solutions – a trend set
to continue due to the market’s advancement towards autonomous
driving, Advanced Driver Assistance Systems (ADAS) and sophisticated
powertrain electrification.
need for differentiated and state-of-the art analog foundry solutions.
TowerJazz’s advanced specialty technology platforms, including power
management, CMOS image sensor, connectivity and MEMS, together
with its design services, are well positioned to provide comprehensive
offerings to address this growing market.
As the automotive industry moves toward higher levels of ADAS integration,
autonomy, and electrification, the automotive semiconductor content is
expected to grow rapidly, dominated by analog, creating an increased
TowerJazz has invested extensively and strategically to provide a variety
of advanced technological and manufacturing capabilities across all
of its key business units.
Advanced Imaging Technologies Designed
for Next-Generation Automotive Systems
In today’s automobiles, cameras based on visible light image sensors
perform a wide range of tasks such as road signs’ detection, lane
departure warning, light beam control, and parking assist. Two additional
complementary imaging technologies significantly augment the imaging
capabilities of visible light sensors: MEMS based bolometer technology
for infrared enhanced imaging, and LiDAR, a detection system that works
on the principle of detection and ranging using laser light, thus providing
much finer resolution than a conventional radar system, allowing high
fidelity 3D mapping of the surrounding area.
TowerJazz addresses current and next-generation automotive
system needs by offering an advanced CMOS image sensor platform
which includes:
• Visible light high dynamic range (HDR) CMOS image sensors with
low dark current and rolling and global shutter pixels enable
imaging with HDR, high frame rate and high-resolution cameras.
• Near-infrared enhanced sensors for low light conditions that allow
detection in near darkness
• Active gated pixel and Single Photon Avalanche Photodiode (SPAD)
technologies to enable time of flight (ToF) sensing in ultra-low light
conditions for LiDAR or similar imaging. By using the ToF information
of the photons reflected from the targets, the imaging system can
build a 3D image of the surrounding area through sophisticated
signal processing algorithms.
TowerJazz CMOS image sensor technologies are offered in its Israel and
Japan fabs and are available on both 200mm and 300mm wafer sizes.
Leading RF and High-Performance Analog
Solutions for the automotive radar, wireless
communication and automotive ethernet markets
Automotive radar sensors become a necessity when detection and
distance measurement is required in low light / adverse weather
conditions (rain/fog/snow). Indeed, automotive radar systems have
become a relatively standard feature in today’s premium and mid-range
automobiles for performing safety and driver assistance tasks such as
forward collision avoidance/warning, lane departure warnings, blind
spot detection, and parking assist. In addition, today’s automobiles are
themselves smartphones on wheels and communicate with surroundings
(V2X) wirelessly for navigation, entertainment and safety LiDAR signal
processing. As the number of ADAS sensors in an automobile increases,
it is becoming clear that there is a need for a sensor network within the
automobile that allows high-speed, low latency communication among
various sensors and a central DSP and CPU.] To address this need, best
practices and technologies from datacom optical networks are being
incorporated to create automotive ethernet. TowerJazz RF HPA technology
offers a one-stop-shop for all these growing needs:
• Automotive radar – TowerJazz’s SiGe Terabit Platform is ideally suited
to serve this growing radar market. As an example, TowerJazz today
manufactures sensors for Denso deployed in the North America
Toyota Camry.
• Wireless communication – The Company’s SiGe BiCMOS Front-End
Module-on-a-Chip RF platform is tailored for WiFi / Bluetooth
communications and has been in high volume production for
many years. In addition, TowerJazz’s advanced RF SOI technology
offers best-in-class Ron-Coff and noise figure for RF switching and
low-noise amplifiers. TowerJazz’s Terabit SiGe platform is ideally
suited for various low noise amplification for GPS, cellular and
WiFi communications.
• Automotive ethernet – TowerJazz’s versatile SiGe Terabit Platform
is the technology of choice for today’s 100Gbps Datacom optical
networks and is ideally suited for automotive ethernet based on
similar communication standards. The Company has recently
announced availability of PH18, the silicon Photonics platform, that
can further enable high-speed optical communications in a car.
TowerJazz RF HPA technologies are offered in its US, Israel and Japan
fabs, with each technology node cross-qualified in at least two fabs.
Best-in-class Power Management differentiated
solutions for tomorrow’s automobiles
The need to maximize miles driven per gallon, or per electric
charge for hybrid/EVs, is incentivizing manufacturers to optimize
the performance of power-train and body electronic systems, for
example, by offering multiple optimum voltage levels for different
devices and thus increasing the efficiency of power electronic
components. In addition, with the conversion of motor controls, LED
headlight drivers and LiDARs to 48V power architecture in new cars,
TowerJazz enables its leading automotive customers to efficiently
electrify tomorrow’s automobiles.
With over 35 years of automotive production experience and more
than half a billion ICs shipped, TowerJazz’s industry leading power
management platform offers best-in-class RDS(on), with scalable voltage
ranges, multiple substrate isolation technologies, and is well-positioned
to serve the growing market.
TowerJazz offers one of the richest, most mature and modular power
management platforms with voltages ranging from 5V to 120V, offering
multiple isolation schemes and scalable LDMOS devices with record
RDS(on) values. This platform is ideally suited for smart power ICs, EV
battery management ICs and primary power converters.
The Company’s 300mm 65nm 5V BCD platform (currently in advanced
stages of development) offers the lowest RDS(on) solution at optimized
cost for multiple secondary PMIC applications in automotive power
management.
TowerJazz also manufactures state of the art discrete power devices,
including high voltage/high power transistors and protection components
widely used in the automotive industry.
The Company has qualified all major 200mm power management
flows in at least two geographically distinct production sites to ensure
manufacturing flexibility.
Sensors
Disruptive Sensor Technologies
The broad semiconductor sensor market continues to grow rapidly
providing a wide range of sensing solutions in embedded-control
applications and smart-systems. The developing multi-billion dollar
markets of IoT, robotics, smart automotive and personal medicine
markets require precise, inexpensive, and low power consuming
semiconductor sensors.
Sensors measure various physical parameters, such as temperature,
pressure, and gas content of the environment, position and angles
of different parts in vehicles, and chemical parameters of blood.
The diversity of application fields stimulates the search for the most
appropriate sensor solutions specific for each application domain and
suitable for mass production in semiconductor foundries.
TowerJazz positions itself as a ”sensor hub” and offers sensor
manufacturing platforms for customers interested in fabricating stand-
alone and embedded sensors of different types, as well as ASICs for
processing the information from various sensors. The Company is
already working with leading partners to develop and manufacture
differentiated sensing technologies to address these applications.
CMOS Image Sensors: TowerJazz is known for the advanced and
proven CMOS image sensor technology featuring pixels with record
size, sensitivity, broad spectral response and low noise for different
application fields.
TMR Magnetic Sensors: TowerJazz has integrated Tunnel
MagnetoResistance (TMR) sensors into its 0.13um CMOS process and
is partnering with a tier-1 customer for volume manufacturing using
this platform. TowerJazz is the only foundry offering embedded TMR
sensors with record sensitivity and reliability. The TMR based magnetic-
field sensors are widely being deployed for accurate, contactless
measurements and control in multiple automotive, industrial systems
and navigation applications.
MEMS: TowerJazz MEMS technologies allow fabrication of high-end
accelerometers, gyro, oscillators, audio sensors and actuators.
Broad market environment sensors: TowerJazz is also developing
an “Environmental Sensor System”, with a broad offering for gas/
temperature/pressure and radiation sensing based on standard
CMOS processes and fab capabilities. TowerJazz has developed high
sensitivity, ultra-low power consuming ionizing radiation sensors
integrated into CMOS process flows without additional masks. The
radiation sensors are used as standalone devices and embedded
by TowerJazz customers into the chips intended for operation in
harsh environments.
TowerJazz is leveraging close partnerships with academia, government
and start-ups to bring these highly differentiated solutions to market,
and respond to the demanding challenges of tomorrow.
24
25
TRANSFER, OPTIMIZATION
AND DEVELOPMENT PROCESS
SERVICES (TOPS)
With established process transfer methodologies, a world-class engineering
team, and vast manufacturing experience, TowerJazz provides high-end
transfer, process development and manufacturing services through its TOPS
business unit (BU) for three major kinds of customers: Integrated Device
Manufacturers (IDMs), fabless companies and those needing to develop from
R&D to production. In addition, the Company supports those that are looking for
external services such as technology licensing and manufacturing capabilities
management. The combination of reputable IP protection, know-how in diverse
technologies, and process flexibility to adapt business models and production
flows to customer requirements, enables TowerJazz to guarantee fast time to
market and ramp to volume production.
TowerJazz preserves customer confidence and satisfaction by successfully
accommodating customers’ unique requirements. With established
methodologies, including “copy smart” to use existing toolsets, and the use
of an internal library of recipes or “copy exact” where necessary, process
transfers achieve high yields and exceptional performance.
The Company offers the following main business models under this BU:
• For IDMS: high volume, secured process transfer, with technical flexibility
and future generation developments.
• For fabless companies: unique processes and tools to fabricate customers’
specialty products.
• Special business models: targeting co-development of novel products
based on customer needs, including full technical support and project
management.
• External Services: technology licensing and management.
The Company continues to increase its TOPS business in multiple manufacturing
facilities, on three continents, maintaining long-term utilization stability and
cost efficiency. TowerJazz is a trusted partner for customers to transfer their
proprietary technology in order to grow their business through additional
available capacity and internal offloading optimization.
In addition, and in parallel to the existing CMOS and power management
(PM) silicon technology, the TOPS BU develops original production platforms
allowing the transfer and/or integration of novel products designed by its
customers. This includes sensor platforms with nanowires formed on SOI,
MEMS technologies, GaN on silicon PM and sensor process flows. Many of
the targeted applications are in the field of rapidly expanding IoT and smart
automotive markets.
“2017 was an
excellent year for
the TOPS business
unit. We grew
together with our
loyal customers,
introduced
new projects,
and expanded
capacity and
presence in
TowerJazz global
manufacturing
facilities. We are
looking forward
to continuing
our long-term
relationships
with our leading
customers, as well
as establishing
new and
differentiated
win-win business
models both in
our traditional and
newly developed
technologies.”
Zmira
Shternfeld-Lavie
Senior Vice President
of Process Engineering R&D
General Manager of TOPs
Business Unit
26
RESEARCH & DEVELOPMENT
Aligned with its market leading customers, TowerJazz is focused on developing
disruptive technologies for emerging applications, enabling future commercialization.
TowerJazz R&D activities are tied to the rapidly developing
semiconductor markets, such as:
• IoT: Developments include original gas sensors and UV
sensors for wearables (control of adverse environments,
protection against the sun, etc.), and unique array-type FG
sensors of ionizing radiation for applications such as dosimetry
in industry and medicine, sterilization, security and safety.
• Automotive: TowerJazz and partners developed MEMS
based bolometer technology allowing best of breed night
vision. Also, TowerJazz has been developing infrared sensing
devices for LiDARs (sensing of light from targets illuminated
with near IR lasers) to be used in locating, ranging, and vision
in inclement weather and for guiding autonomous cars.
Besides sensors themselves, specialized BiCMOS platforms
have been developed for integrating sensor devices and
processing of the analog information obtained.
Opportunity Leadership Realization for 2018
By combining the experience of R&D engineers from diverse
fields, TowerJazz seeds novel ideas that enable breakthrough
technical solutions. Successful feasibility studies of several
innovative ideas in the fields of switching devices, sensors,
silicon photonics and neuromorphic computing were performed
that strengthen the Company’s business direction and open
new opportunities for TowerJazz customers.
TowerJazz fosters a culture of global innovation, providing its
highly talented employees worldwide with a platform to cross-
fertilize disruptive ideas, while working in tight cooperation with
academia, governments and start-ups to advance development
of commodity and specialized ASICs.
In 2017, the Company’s R&D projects were supported by customers,
internal funding, government and international programs.
TowerJazz Innovation Partnerships
• TowerJazz and UCSD demonstrated a next-generation
wireless 5G communication – for both transmit and receive
chipsets – with data wirelessly transmitted at greater than 12
Gbps, more than 10x today’s 4G LTE standard. The technology
targets the FCC’s newly released 28GHz band for next-
generation wireless communication.
• TowerJazz is part of the CC-SENS (German-Israeli consortium
on CMOS compatible nanosensors) program launched to
develop novel gas sensors for advanced automotive and
IoT applications. The consortium consists of TowerJazz,
Technion and Tel Aviv University on the Israeli side, and
Singulus Technologies and Friedrich-Alexander-University
(FAU) on the German side.
• Optimized the Company’s leading 300GHz SiGe technology
(H5) for 400GbE communications.
• Partnered with Cavendish Kinetics to develop high volume
RF MEMS with unprecendented reliability.
• Announced the TowerJazz foundry Silicon Photonics (SiPho)
platform that includes waveguides, modulators and photodiodes
to guide and manipulate light for optical communication and
high speed data transmission in networks and data centers.
• Expanded R&D cooperation in magnetic sensors in
partnership with Crocus Technologies (volume
manufacturing of novel TMR sensors) and with several
companies and research institutions within the H2020
European Comission GREAT consortium.
• Announced a partnership with YCM for backside illuminated
CMOS image sensor (BSI) manufacturing in Changchun,
China; enables TowerJazz to offer state of the art BSI flow
for high-end image sensor markets.
• Maintained valuable relationships with USGov and DARPA,
through which TowerJazz is involved with many programs
in sensors, high speed electronics, and novel devices.
Latest Grants & Project Wins
TowerJazz has won prestigious grants within the German-
Israeli program on nanosensors (CC-SENS) and for an internal
Israeli program on gas sensors for the IoT. TowerJazz also
participated in projects associated with the US Department
of Defense (DoD), including new programs for the branches
of the US armed services.
Patents
In 2017, TowerJazz was granted 22 US patents and filed multiple
new applications. The protected technologies include original
back-side illuminated and global shutter imagers, power
management devices, advanced antenna switches on SOI,
MEMS technologies, gas sensors, and methods for increasing
performance of CMOS and BiCMOS products.
Talks & Publications
TowerJazz gave several invited talks at international conferences/
roundtables with its engineers serving in Technical/Steering
Committees and as Section Chairs of IEDM, IEEE IMW, as well
as other highly prestigious international venues. Numerous
research papers were published in well-known international
journals and conference proceedings such as IEEE ED,
Microelectronics Reliability and others. Several invited papers
were published, and Company representatives acted as editors
and reviewers in leading international journals. Internally,
Vol. 8 of the TowerJazz Technical Journal (TJ2) was released,
featuring technical papers by employees from TowerJazz fabs
and R&D divisions.
Dr. Yakov Roizin
Director of Emerging
Technologies and
Technical Fellow
Dr. David Howard
Executive Director and
Technical Fellow
27
CORPORATE SOCIAL RESPONSIBILITY
TowerJazz is an equal opportunity employer with
a corporate culture that emphasizes respect,
recognition and opportunity for all employees to
grow as individuals and to thrive. Our employee
base is comprised of individuals from various
cultures and backgrounds and as one global
company, we focus on ethical and moral behavior
in all of our engagements, including customers,
partners and employees.
Our business initiatives are realized through our
valued 5,500 employees worldwide. Our employees
are our greatest strength – their capabilities,
dedication, loyalty and passion are primary factors
in the Company’s collective achievements. We
believe that organizational motivation is created
when employees gain confidence by being given the
tools and opportunities to meet big challenges. Our
diverse employee base provides a broad foundation
for knowledge sharing and a platform for new ideas
and innovation.
Leading with a Social Purpose
Realizing that corporate social responsibility is an
integral building block of our success, TowerJazz
aims to enrich and improve not only individuals’
lives, but enhance society as a whole. We believe
that social responsibility is essential for a healthy
and balanced corporate culture. The Company’s goal
is to inspire youth to pursue careers in science and
technology by creating a synergy between educators
and corporate resources. TowerJazz also supports
local educational institutions whose mission is to
improve public awareness of science and technology.
GAIA Project
28
TowerJazz supports a wide range of health, education,
social and community activities that affect and
involve its employees and the community’s well-
being. TowerJazz’s social contributions are focused
on education, environmental preservation, funding
various programs, donating goods, and providing
other services, with the involvement of our dedicated
and caring employee volunteers.
In 2017, TowerJazz social responsibility
involvement included:
Global Awareness Investigation and Action (GAIA) Program
For the past eight years, TowerJazz has sponsored
the GAIA international program, worked with and
mentored students with varied cultural backgrounds,
both within and outside of Israel. The GAIA program
is led through initiatives of Dr. Stuart Fleisher at
the American International School (AIS) in Israel
to focus and involve students in environmental
awareness and responsibility. TowerJazz provides
financial support, access to onsite equipment,
engineering support and collaboration on a variety
of research projects. Currently, TowerJazz is directly
involved in groundbreaking research through a GAIA
project where young student researchers from AIS
in Israel and the local Ha’Kfar HaYarok School are
the lead stakeholders in solving critical questions
through technology to increase diversity in the
genetic variations of plant food species in Israel.
First Lego League
TowerJazz sponsors teams in both Israel and the US.
Guided by adult coaches, kids are challenged to think
like scientists and engineers. The teams research a
real-world problem and are challenged to develop
a solution. They also build, test, and program an
autonomous robot using LEGO® MINDSTORMS®
technology to solve a set of missions in the Robot
Game. First Lego League includes over 30,000 teams
from over 85 countries around the world.
English and Math Classes Volunteering
This is the fourth year TowerJazz employees in Israel
have participated in an English learning project, giving
the youth in Israel an opportunity to learn English,
improve their communication skills, and broaden their
English vocabulary to help open their minds to the
opportunities their future can offer. In addition, this
year, TowerJazz entered into a new project teaching
Math at a high school in Migdal Haemek, Israel.
Youth Clubs for kids
Employees at the Migdal Haemek, Israel facility support youth clubs for
kids who need help with homework or need emotional support. This
program has been in effect for the past eight years with a team of about
25 volunteers that participate in this activity once a week.
Working Wardrobes
In Newport Beach, CA, TowerJazz donated funds and employees
volunteered at Working Wardrobes – an organization that assists survivors
of domestic violence and other adults, such as veterans looking to re-
enter the workforce – through life skills education, career counseling
and providing suitable attire.
Food Bank Events
In Newport Beach, CA, TowerJazz employees participated in a Corporate
Social Responsibility Day at the Second Harvest Food Bank of Orange
County. Employees volunteered to help with various activities such as
sorting and boxing perishables and helping with other activities.
At the Company’s San Antonio, TX facility (TowerJazz Texas), employee
volunteers contributed to the community by supporting a Food Bank
event. They packed over 19,000 lbs. of food which translates to over 15,000
meals for people in the area who are in dire need of food for their families.
Educational Supplies
At TowerJazz Texas, to support children in need within the community,
school supplies were purchased, and employees filled 250 backpacks.
During the holiday season, TowerJazz Texas also purchased 400
educational toys and employees donated their time wrapping these gifts.
Good Deeds Day
Good Deeds Day is an international celebration of DOING GOOD! This past
year in April, TowerJazz participated in “Good Deeds Day” activities around
the world. Employees collaborated with environmental organizations and
retirement institutions, renovated buildings, prepared food packages for
families in need and participated in blood drives.
“We focus on
empowering
our employees
and are proud of
their continuous
involvement to
enhance the
communities near
our facilities and
take part in our
corporate social
responsibility
initiatives.”
Dalit Dahan
Senior Vice President of
Human Resources and
Information Technology
29
TowerJazz 2017 Annual Report
FOURTH QUARTER AND FISCAL YEAR 2017 FINANCIAL RESULTS PRESS RELEASE
TOWERJAZZ REPORTS FISCAL YEAR 2017 RECORD RESULTS
IN REVENUES, GROSS PROFIT, OPERATING PROFIT, EBITDA, NET PROFIT,
CASH FROM OPERATIONS AND FREE CASH FLOW
MIGDAL HAEMEK, ISRAEL – February 22, 2018 –
TowerJazz (NASDAQ: TSEM & TASE: TSEM) reported
today its results for the fourth quarter and full year
ended December 31, 2017.
Highlights of the Full Year 2017:
• Record revenues of $1.39 billion, up 11% year
over year;
• Organic revenues up 23% year over year.
• Record EBITDA of $425 million, up 16% year over
year;
• Record net profit of $298 million, as compared
to $204 million for the full year of 2016;
• Record free cash flow of $191 million, as compared
to free cash flow of $118 million for the full year
of 2016.
Highlights of the Fourth Quarter of 2017:
• Record revenues of $358 million, as compared
with $340 million in the fourth quarter of 2016;
• EBITDA of $107 million and net profit of $147 million,
as compared to $105 million and $48 million in
the fourth quarter of 2016, respectively;
• Free cash flow of $44 million, as compared to free
cash flow of $39 million for the fourth quarter
of 2016.
CEO End of Year Commentary
Mr. Russell Ellwanger, Chief Executive Officer of
TowerJazz, commented: “2017 was the best year for
the Company to date, as seen in the across the board
record financial results, as well as, and maybe more
importantly, the realization of several key strategic
initiatives, providing a palpable foundation for growth
well into the next decade. We continue, as a team,
to be committed and passionate to create value. We
are confident that the strength and capabilities of
the Company - our technology offerings, long-term
customer and partner relationships, and devoted
worldwide employee base, will propel us to even
greater heights.”
Full Year 2017 Financial Results
Revenues for 2017 were at a record of $1.39 billion,
reflecting an 11% growth as compared to $1.25 billion
for the prior year. Year over year organic growth,
excluding the Panasonic and Maxim long-term
committed contracts, was 23%.
Gross profit for 2017 was at a record of $354 million,
an increase of 17% as compared to $303 million in
the prior year.
Operating profit for 2017 was at a record of $220
million, an increase of 26% as compared to $175
million in 2016.
EBITDA for 2017 totaled to a record $425 million,
or 31% EBITDA margin, representing a 16% increase
as compared to $367 million in 2016.
Net profit for 2017 was at a record of $298 million,
representing a record of $3.08 basic earnings
per share and a record of $2.90 diluted earnings
per share. Net profit for 2017 included two one-
time income tax benefit items as follows: (i) $82
million income tax benefit resulting from Israeli
deferred tax asset realization following the release
of a valuation allowance, which the Company had over
the net operating loss carry forward for tax in the Israeli
parent Company, and (ii) $13 million income tax benefit
resulting from the US tax reform and the reduction
in federal income tax rate from 35% to 21%, which will
reduce the Company’s future tax payments and already
caused a reduction of certain deferred tax liabilities (net
of certain deferred tax assets).
Net profit for 2016 was $204 million, representing
$2.33 basic earnings per share and $2.09 diluted
earnings per share. Net profit for 2016 included $50
million net gain from the San Antonio fab acquisition
and $6 million income tax benefit related to the
Nishiwaki fab closure offset by $7 million non-cash
financing expense relating to the Israeli banks’ loans
early repayment.
On an adjusted basis, as described and reconciled
in the tables below, net profit for the full year of
2017 was $226 million, a 29% increase as compared
to $175 million in 2016.
Free cash flow for 2017 was a record of $191 million,
with a record $356 million cash flow from operations
and $165 million investments in fixed assets, net.
The other main cash activities during the year were
comprised of the following: $115 million invested in
marketable securities, $31 million received from the
exercise of warrants and options and $50 million
debt repaid.
Fourth Quarter Results Overview
Revenues for the fourth quarter of 2017 were a
record $358 million, as compared to $340 million
in the fourth quarter of 2016.
Gross and operating profits for the fourth quarter of
2017 were $89 million and $54 million, respectively,
as compared to $88 million and $55 million,
respectively, in the fourth quarter of 2016.
EBITDA for the fourth quarter of 2017 was $107
million, or 30% EBITDA margin, as compared to
$105 million in the fourth quarter of 2016.
Net profit for the fourth quarter of 2017 was a record
of $147 million as compared to $48 million in the
fourth quarter of 2016. Basic earnings per share for
the quarter was a record $1.50 and diluted earnings
per share was a record $1.40, as compared to $0.53
and $0.49, respectively, in the fourth quarter of 2016.
Net profit for the fourth quarter of 2017 included
the two one-time income tax benefit items of $82
million and $13 million, as described above.
On an adjusted basis, as described and reconciled
in the tables below, net profit for the fourth quarter
of 2017 was $60 million, as compared to $53 million
in the fourth quarter of 2016.
Free cash flow for the fourth quarter of 2017 was $44
million, with $85 million cash flow from operations
and $41 million investments in fixed assets, net. The
other main cash activities during the fourth quarter
of 2017 were $65 million invested in marketable
securities, $17 million debt repaid and $3 million
received for the exercise of warrants and options.
Cash (including short-term marketable securities),
net of gross debt as of December 31, 2017, totaled to
a record of $226 million, as compared to net cash
of $37 million as of December 31, 2016.
In February 2018, Wells Fargo and Jazz Semiconductor,
the US wholly-owned subsidiary of the Company,
signed a 5-year extension of the existing credit line
agreement, which has been originally set to mature
in December 2018, under which Jazz Semiconductor
TowerJazz 2017 Annual Report
will be able to drawdown up to $70 million through
2023. Any such drawdown will bear an interest rate
ranging from Libor + 1.25% to Libor + 1.75%. As of
December 31, 2017, and the date hereof, there were
no loans drawdown under this credit line.
Shareholders’ equity as of December 31, 2017 was a
record of $1.03 billion, as compared to $683 million
as of December 31, 2016.
Business Outlook
TowerJazz expects revenues for the first quarter
of 2018 ending March 31, 2018 to be $325 million,
with an upward or downward range of 5%, in line
with present industry seasonality, and forecasts
growth throughout the year.
Teleconference and Webcast
TowerJazz will host an investor conference call
today, February 22, 2018, at 10:00 a.m. Eastern time
(9:00 a.m. Central time, 8:00 a.m. Mountain time,
7:00 a.m. Pacific time and 5:00 p.m. Israel time) to
discuss the Company’s financial results for the fourth
quarter of 2017, for fiscal year 2017 and its outlook.
This call will be webcast and can be accessed via
TowerJazz’s website at www.towerjazz.com, or by
calling: 1-888-668-9141 (U.S. Toll-Free), 03-918-0609
(Israel), +972-3-918-0609 (International). For those who
are not available to listen to the live broadcast, the call
will be archived on TowerJazz’s website for 90 days.
The Company presents its financial statements in accordance with U.S. GAAP.
The financial information included in the tables below includes unaudited
condensed financial data. Some of the financial information in this release,
which we describe in this release as “adjusted financial measures”, is non-
GAAP financial measures as defined in Regulation G and related reporting
requirements promulgated by the Securities and Exchange Commission as
they apply to our Company. These adjusted financial measures are calculated
excluding one or more of the following: (1) amortization of acquired intangible
assets; (2) compensation expenses in respect of equity grants to directors,
officers and employees; (3) financing costs resulted from banks loans early
repayment, (4) gain from acquisition, net, (5) non-recurring items related to
long-term investments, (6) income tax benefit resulted from Israeli deferred
tax asset realization following valuation allowance release; (7) income tax
benefit related to U.S. tax reform;(8) income tax benefit related to Nishiwaki
closure; and (9) acquisition related costs. These adjusted 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 adjusted financial measures, as well as a
reconciliation between the adjusted financial measures and the comparable
GAAP financial measures. As used and/ or presented in this release, as well
as calculated in the tables herein, the term Earnings Before Interest Tax
Depreciation and Amortization (EBITDA) consists of net profit in accordance
with GAAP, excluding gain from acquisition, net, interest and other financing
expense, net, other income, net, taxes, non-controlling interest, depreciation
and amortization expense, stock based compensation expense, acquisition
related costs and Nishiwaki Fab restructuring and impairment cost (income),
net. EBITDA is reconciled in the tables below from GAAP operating profit.
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
adjusted 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
30
31
31
TowerJazz 2017 Annual Report TowerJazz 2017 Annual Report
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
A S S E T S
CURRENT ASSETS
Cash, cash equivalents and short-term deposits
Marketable securities
Trade accounts receivable
Inventories
Other current assets
Total current assets
LONG-TERM INVESTMENTS
PROPERTY AND EQUIPMENT, NET
INTANGIBLE ASSETS, NET
GOODWILL
DEFERRED TAX AND OTHER LONG-TERM ASSETS
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt
Trade accounts payable
Deferred revenue and customers' advances
Other current liabilities
Total current liabilities
LONG-TERM DEBT
LONG-TERM CUSTOMERS' ADVANCES
LONG-TERM EMPLOYEE RELATED LIABILITIES
DEFERRED TAX LIABILITY AND OTHER LONG-TERM LIABILITIES
TOTAL LIABILITIES
TOTAL SHAREHOLDERS' EQUITY
$
$
$
December 31,
2017
September 30,
2017
(unaudited)
December 31,
2016
445,961 $
113,874
149,666
143,315
21,516
874,332
26,073
635,124
19,841
7,000
111,269
480,407 $
49,738
150,039
143,300
21,465
844,949
27,091
633,107
21,627
7,000
18,484
389,377
--
141,048
137,532
30,041
697,998
25,624
616,686
28,129
7,000
4,447
1,673,639 $
1,552,258 $
1,379,884
105,958 $
115,347
14,338
66,730
302,373
45,664 $
109,385
26,454
64,259
245,762
228,723
295,485
31,908
14,662
66,267
643,933
1,029,706
37,674
14,170
85,380
678,471
873,787
48,084
99,262
26,169
73,600
247,115
296,144
41,874
14,176
97,961
697,270
682,614
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,673,639 $
1,552,258 $
1,379,884
TowerJazz 2017 Annual Report
other profit or cash flow statement data prepared in accordance with GAAP.
The term Net Cash, as used and/ or presented in this release, is comprised
of cash, cash equivalents, short-term deposits and short-term marketable
securities (in the amounts of $560 million and $389 million as of December
31, 2017 and December 31, 2016, respectively) less the outstanding principal
amount of bank loans (in the amounts of $138 million and $166 million as of
December 31, 2017 and December 31, 2016, respectively), the outstanding
principal amount of capital leases (in the amounts of $16 million as of December
31, 2017) and the outstanding principal amount of debentures including the
related hedging effect (in the amounts of $180 million and $186 million as of
December 31, 2017 and December 31, 2016, respectively). The term Net Cash is
not a required GAAP financial measure, may not be comparable to a similarly
titled measure employed by other companies and should not be considered
in isolation or as a substitute for cash, debt, 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. In addition, the term Free Cash Flow, as used and/ or presented in this
release, is calculated to be cash from operating activities (in the amounts
of $356 million and $327 million for the years ended December 31, 2017 and
December 31, 2016, respectively and in the amounts of $85 million and $82
million for the three months periods ended December 31, 2017 and December
31, 2016, respectively) less cash for investments in property and equipment,
net (in the amounts of $165 million and $209 million for the years ended
December 31, 2017 and December 31, 2016, respectively and in the amounts
of $41 million and $43 million for the three months periods ended December
31, 2017 and December 31, 2016, respectively). The term Free Cash Flow is
not a required GAAP financial measure, may not be comparable to a similarly
titled measure employed by other companies and 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.
About TowerJazz
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM)
and its subsidiaries operate collectively under the brand
name TowerJazz, the global specialty foundry leader.
TowerJazz manufactures next-generation integrated
circuits (ICs) in growing markets such as consumer,
industrial, automotive, medical and aerospace and
defense. TowerJazz’s advanced technology is comprised
of a broad range of customizable process platforms
such as: SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS,
CMOS image sensor, integrated power management
(BCD and 700V), and MEMS. TowerJazz also provides
world-class design enablement 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 facilities in Japan (two 200mm
and one 300mm). For more information, please visit
www.towerjazz.com.
CONTACTS:
Noit Levy-Karoubi | TowerJazz | +972 4 604 7066
Noit.levi@towerjazz.com
GK Investor Relations | Gavriel Frohwein
(646) 688 3559 | towerjazz@gkir.com
reliance on such forward-looking statements. Potential risks and uncertainties
include, without limitation, risks and uncertainties associated with: (i) demand
in our customers’ end markets; (ii) over demand for our foundry services and/
or products that exceeds our capacity; (iii) maintaining existing customers
and attracting additional customers, (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 lender banks and bondholders (as of December 31, 2017 we are in
compliance with all such covenants included in our banks’ agreements,
bond G indenture and others), (x) obtaining new customer engagements,
products qualification and production ramp-up of the TPSCo facilities and our
San Antonio facility, (xi) the closure of TJP within the scope of restructuring
our activities and business in Japan, settling any future claims or potential
claims, (xii) 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, (xiii) receipt of orders that are lower than the
customer purchase commitments, (xiv) failure to receive orders currently
expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of
global recession, unfavorable economic conditions and/or credit crisis, (xvii)
our ability to accurately forecast financial performance, which is affected by
limited order backlog and lengthy sales cycles, (xiii) possible situations of
obsolete inventory if forecasted demand exceeds actual demand when we
manufacture products before receipt of customer orders, (xix) the cyclical
nature of the semiconductor industry and the resulting periodic overcapacity,
fluctuations in operating results and future average selling price erosion, (xx)
the execution of debt re-financing and/or fundraising to enable the service of
our debt and/or other liabilities, (xxi) 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, (xxii) the purchase of equipment to increase capacity, the timely
completion of the equipment installation, technology transfer and raising the
funds therefor, (xxiii) the concentration of our business in the semiconductor
industry, (xxiv) product returns, (xxv) 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, (xxvi) competing effectively, (xxvii)
use of outsourced foundry services by both fabless semiconductor companies
and integrated device manufacturers; (xxiii) achieving acceptable device
yields, product performance and delivery times, (xxix) 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, (xxx) retention of key employees
and recruitment and retention of skilled qualified personnel, (xxxi) exposure
to inflation, currency rates (mainly the Israeli Shekel and Japanese Yen) and
interest rate fluctuations and risks associated with doing business locally and
internationally, as well fluctuations in the market price of our traded securities,
(xxxii) issuance of ordinary shares as a result of conversion and/or exercise
of any of our convertible securities, as well as any sale of shares by any of
our shareholders, or any market expectation thereof, which may depress
the market price of our ordinary shares and may impair our ability to raise
future capital, (xxxiii) meeting regulatory requirements worldwide, including
environmental and governmental regulations; (xxxiv) negotiation and closure
of definitive agreements in relation to the fab establishment in China, as well
as implementation of this project and licensing of technologies, subject to
obtaining required funding and receipt of payment milestones, qualification
and ramp of process flows and products to enable mass production for
customers and attain revenue to levels that would cover the facility’s fixed
costs; 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. We note that the risk disclosure included in previous
releases related to the shareholder class action pending in Israel has been
removed as a result of the Israeli court decision in February 2018 granting
the Company’s motion to dismiss the action in its entirety.
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. 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.
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
(Financial tables follow)
32
33
TowerJazz 2017 Annual Report
TowerJazz 2017 Annual Report
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars and share count in thousands, except per share data)
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars and share count in thousands, except per share data)
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES:
Research and development
Marketing, general and administrative
OPERATING PROFIT
INTEREST EXPENSE, NET
OTHER FINANCING INCOME (EXPENSE), NET
OTHER EXPENSE, NET
PROFIT BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE), NET
PROFIT BEFORE NON CONTROLLING INTEREST
NON CONTROLLING INTEREST
NET PROFIT
BASIC EARNINGS PER SHARE
Weighted average number of shares
DILUTED EARNINGS PER SHARE
Net profit used for diluted earnings per share
Three months ended
December 31,
2017
September 30,
2017
December 31,
2016
$
357,614
$
354,557 $
340,379
268,256
89,358
265,439
89,118
252,648
87,731
18,370
16,502
34,872
54,486
(1,783)
(2,270)
(3,027)
47,406
101,236 (a)
148,642 (a)
(1,431)
17,094
16,822
33,916
55,202
(1,776)
(2,266)
(253)
50,907
3,334
54,241
1,033
$
$
$
$
147,211 (a) $
55,274 $
1.50 (a) $
0.56
$
98,312
97,947
1.40 (a) $
149,502 (a) $
0.54
57,519
$
$
16,320
16,209
32,529
55,202
(2,230)
1,215
(948)
53,239
(986)
52,253
(3,972)
48,281
0.53
91,235
0.49
50,397
Weighted average number of shares
106,776
106,384
103,613
(a) Three months ended December 31, 2017 included $82,370 Israeli deferred tax asset realization following valuation allowance release and
$12,970 income tax benefit related to U.S. tax reform.
REVENUES
COST OF REVENUES
GROSS PROFIT
OPERATING COSTS AND EXPENSES:
Research and development
Marketing, general and administrative
Nishiwaki Fab restructuring and impairment cost (income), net
OPERATING PROFIT
INTEREST EXPENSE, NET
OTHER FINANCING EXPENSE, NET
GAIN FROM ACQUISITION, NET
OTHER INCOME (EXPENSE), NET
PROFIT BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE), NET
PROFIT BEFORE NON CONTROLLING INTEREST
NON CONTROLLING INTEREST
NET PROFIT
BASIC EARNINGS PER SHARE
Weighted average number of shares
DILUTED EARNINGS PER SHARE
Net profit used for diluted earnings per share
Weighted average number of shares
Year ended
December 31,
2017
2016
$
1,387,310
$
1,249,634
1,033,005
354,305
67,664
66,799
--
134,463
219,842
(7,840)
(7,607)
--
(2,627)
201,768
99,888 (b)
301,656 (b)
(3,645)
298,011 (b)
3.08 (b)
96,647
2.90 (b)
306,905 (b)
105,947
$
$
$
$
$
$
$
$
946,534
303,100
63,134
65,439
(627)
127,946
175,154
(11,857)
(12,492)
50,471 (c)
9,322
210,598 (c)
(1,432)
209,166 (c)
(5,242)
203,924 (c)
2.33 (c)
87,480
2.09 (c)
212,160 (c)
101,303
(b)
Year ended December 31, 2017 included $82,370 tax benefit resulted from Israeli deferred tax asset realization following
valuation allowance release and $12,970 income tax benefit related to U.S. tax reform.
(c) Year ended December 31, 2016 included $50,471 net gain from San-Antonio fab acquisition from Maxim.
34
35
TowerJazz 2017 Annual Report
TowerJazz 2017 Annual Report
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL DATA
(dollars and share count in thousands, except per share data)
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF CERTAIN FINANCIAL DATA
(dollars and share count in thousands, except per share data)
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT
Stock based compensation
Amortization of acquired intangible assets
Non-recurring items related to long term investments
Income tax benefit resulted from Israeli deferred tax asset realization following valuation allowance
release as described above
Income tax benefit related to U.S. tax reform
ADJUSTED NET PROFIT
ADJUSTED NET PROFIT PER SHARE:
Basic
Diluted
Fully diluted
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:
Basic
Diluted
Fully diluted
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER SHARE DATA:
Basic
Diluted
Fully diluted
EBITDA CALCULATION:
GAAP OPERATING PROFIT
Depreciation of fixed assets
Stock based compensation
Amortization of acquired intangible assets
EBITDA
December 31,
2017
T h r e e m o n t h s e n d e d
September 30,
2017
December 31,
2016
$
$
$
$
$
$
$
$
$
$
147,211 $
3,481
1,564
3,009
(82,370)
(12,970)
59,925 $
0.61 $
0.58 $
0.58 $
59,925
62,216
62,216
$
$
$
98,312
106,776
107,721
54,486 $
47,741
3,481
1,564
55,274 $
3,750
2,161
--
--
--
61,185 $
0.62 $
0.60 $
0.59 $
61,185
63,430
63,430
$
$
$
97,947
106,384
107,729
55,202 $
47,544
3,750
2,161
107,272 $
108,657 $
48,281
2,381
2,777
--
--
--
53,439
0.59
0.54
0.52
53,439
55,555
55,555
91,235
103,613
107,121
55,202
44,874
2,381
2,777
105,234
36
Year ended
December 31,
2017
2016
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
GAAP NET PROFIT
Stock based compensation
Amortization of acquired intangible assets
Financing cost resulted from banks loans early repayment
Gain from acquisition, net
Non-recurring items related to long term investments
Income tax benefit resulted from Israeli deferred tax asset realization following valuation allowance release as
described above
Income tax benefit related to U.S. tax reform
Income tax benefit in relation to Nishiwaki closure
ADJUSTED NET PROFIT
ADJUSTED NET PROFIT PER SHARE:
Basic
Diluted
Fully diluted
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE DATA:
Basic
Diluted
Fully diluted
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE PER SHARE DATA:
Basic
Diluted
Fully diluted
EBITDA CALCULATION:
GAAP OPERATING PROFIT
Depreciation of fixed assets
Stock based compensation
Amortization of acquired intangible assets
Non-recurring items related to long term investments
EBITDA
$
$
$
$
$
$
$
$
$
$
$
298,011
11,648
8,307
--
--
3,009
(82,370)
(12,970)
--
225,635
$
$
$
$
$
$
$
$
2.33
2.21
2.18
225,635
234,529
234,529
96,647
105,947
107,721
219,842
185,464
11,648
8,307
--
425,261
$
203,924
9,406
9,780
6,653
(50,471)
2,378
--
--
(6,472)
175,198
2.00
1.81
1.71
175,198
183,434
183,434
87,480
101,303
107,121
175,154
169,958
9,406
9,780
2,378
366,676
37
TowerJazz 2017 Annual Report
TowerJazz 2017 Annual Report
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)
(dollars in thousands)
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
T h r e e m o n t h s e n d e d
December 31,
2017
December 31,
2016
CASH FLOWS - OPERATING ACTIVITIES
Year ended
December 31,
2017
December 31,
2016
Three months ended
December 31,
2017
(unaudited)
December 31,
2016
(unaudited)
Cash and short-term deposits - beginning of period
$
480,407
$
362,833
Net profit for the period
$
301,656
$
209,166
$
148,642
$
52,253
Cash from operations
Investments in property and equipment, net
Exercise of warrants and options, net
Debt repaid, net
Effect of Japanese Yen exchange rate change over cash balance
Investments in marketable securities and deposits
Cash and short-term deposits - end of period
Free Cash Flow
85,285
(41,349)
3,278
(16,863)
70
(64,867)
445,961
43,936
$
$
81,835
(42,929)
10,644
(5,653)
(17,353)
--
389,377
38,906
$
$
Year ended
December 31,
2017
December 31,
2016
Cash and short-term deposits - beginning of period
$
389,377
$
205,575
Cash from operations
Investments in property and equipment, net
Exercise of warrants and options, net
Debt received (repaid), net
Effect of Japanese Yen exchange rate change over cash balance
TPSCo dividend to Panasonic
Investments in marketable securities and deposits
Cash and short-term deposits - end of period
Free Cash Flow
355,635 (d)
(164,717)
31,315
(50,255)
3,720
(4,378)
(114,736)
445,961
$
327,468
(209,624)
38,803
37,091
5,635
(2,563)
(13,008)
389,377
190,918 (d) $
117,844
$
$
(d) Cash from operations for the year ended December 31, 2017 included $18,000 received from Tacoma as announced on
August 21, 2017.
Adjustments to reconcile net profit for the period
to net cash provided by operating activities:
Income and expense items not involving cash flows:
Depreciation and amortization
Effect of indexation, translation and fair value measurement on debt
Other expense (income), net
Gain from acquisition, net
Changes in assets and liabilities:
Trade accounts receivable
Other current assets
Inventories
Trade accounts payable
Deferred revenue and customers' advances
Other current liabilities
Long-term employee related liabilities
Deferred tax, net
Net cash provided by operating activities
CASH FLOWS - INVESTING ACTIVITIES
Investments in property and equipment, net
Investments in marketable securities and deposits, net
Net cash used in investing activities
CASH FLOWS - FINANCING ACTIVITIES
Debt received (repaid), net
Exercise of warrants and options, net
Dividend payment to Panasonic
Net cash provided by (used in) financing activities
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE
INCREASE (DECREASE) IN CASH AND SHORT-TERM DEPOSITS
CASH AND SHORT-TERM DEPOSITS - BEGINNING OF PERIOD
208,411
12,865
2,627
--
(6,564)
(8,321)
(4,277)
(8,649)
(21,803)
(8,219)
(3,247)
(108,844)
355,635 (d)
197,606
8,442
(9,322)
(50,471)
(30,104)
(265)
(22,069)
5,550
23,581
(145)
(798)
(3,703)
327,468
51,310
2,281
3,027
--
788
445
92
(2,786)
(17,882)
1,765
(2,482)
(99,915)
85,285
(164,717)
(114,736)
(279,453)
(209,624)
16,992
(192,632)
(41,349)
(64,867)
(106,216)
(50,255)
31,315
(4,378)
(23,318)
3,720
56,584
389,377
37,091
38,803
(2,563)
73,331
5,635
213,802
175,575
(16,863)
3,278
--
(13,585)
70
(34,446)
480,407
CASH AND SHORT-TERM DEPOSITS - END OF PERIOD
$
445,961
$
389,377
$
445,961
$
51,776
(2,532)
948
--
(18,200)
61
(300)
(7,347)
5,634
(2,448)
(385)
2,375
81,835
(42,929)
--
(42,929)
(5,653)
10,644
--
4,991
(17,353)
26,544
362,833
389,377
(d) Net cash provided by operating activities for the year ended December 31, 2017 included $18,000 received from Tacoma as announced on August 21,
2017.
38
39
w w w . t o w e r j a z z . c o m
TOWERJAZZ 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
Investor Relations &
Corporate Communications
Noit Levy-Karoubi
Vice President
Phone: +972-4-6047066
E-mail: noit.levi@towerjazz.com