SanDisk Corp., and Tower Semiconductor Ltd., held a joint press conference this week to announce their entry into an agreement under which SanDisk will make a $75 million strategic investment in Tower.
In return for its investment, Sunnyvale, Calif.-based SanDisk will receive equity, corresponding representation on Tower's board and committed production capacity in the advanced manufacturing facility that Tower plans to build adjacent to its current facility in Migdal Ha'emek, Israel.
Tower plans to raise additional equity of approximately $350 million, mostly from other strategic partners in similar transactions. Following completion of all the financing transactions necessary for the new wafer manufacturing facility, SanDisk expects to hold a 10% stake in Tower, while the Israel Corp. will hold about 20% of the company. Additional strategic partners to join the initiative will hold approximately 30% of the company.
Tower's Co-Chief Executive Officer Dr. Yoav Nissan-Cohen said that Tower expects to announce similar agreements with additional wafer partners in the very near future.
Dr. Eli Harari, President and CEO of SanDisk said, "SanDisk is very pleased to announce this strategic investment in Tower Semiconductor. This step represents a natural extension of our strategic alliance with Toshiba for the joint development and manufacturing of advanced flash memories and SD (Secure Digital) Card controllers. Toshiba has recently agreed to transfer its advanced CMOS Logic technology to Tower under a separate Technology License Agreement. We intend to incorporate this technology in the design and future manufacturing by Tower of the advanced controller chips used in SanDisk's flash memory cards. Our highly successful SanDisk Israel Design Center, which has the responsibility for developing every SanDisk Flash controller used in our MultiMediaCards and Secure Digital Cards, will work closely with Tower to bring up the production of future advanced controller chips for SanDisk."
Nissan-Cohen continued, "This fab, which will be the most advanced pure-play foundry facility in Europe, will enable us to provide our customers with leading edge processes and meet the demand for our advanced specialized technologies. With the new fab, we will be able to maximize the value of our CMOS image sensor technology, and also of the microflash process, which we developed jointly with Saifun Semiconductor, based on their pioneering technology."
Harari also said that a strong financial incentives package expected from the Israeli government was a critical element in SanDisk's decision to sign the agreement with Tower. The incentives package would include substantial grants and favorable tax breaks.
According to their release, Tower will use the investment, expected government grant, bank loans and its own cash toward constructing an advanced fab adjacent to its current facility in Migdal Ha'emek, Israel. The new fab, called "Fab 2", is planned to employ approximately 1,000 professionals and produce up to 33,000 200-mm wafers per month. Tower has already started recruiting employees for Fab 2 in Israel and abroad, and is planning to commence construction of the new Fab later this year.
The agreement between Tower and SanDisk follows the previously announced technology transfer agreement between Tower and Toshiba Corp., under which Toshiba agreed to transfer the deep sub-micron CMOS process technologies to Tower for use in the new manufacturing facility. The transfer of know-how has already begun with Tower engineers at Toshiba's plant in Japan.