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TSEM: Tower Will More than Triple its 300mm Capacity Through its New Deal with ST Microelectronics


By Lisa Thompson



Today Tower (NASDAQ:TSEM) announced it had struck a deal with STMicroelectronics (NYSE:STM) to utilize a third of ST’s Agrate R3 fab now under construction in Agrate Brianza, Italy. It is a 300mm fab and Tower will help increase capacity utilization reducing wafer costs and making it a win-win for both companies. Most importantly this arrangement will more than triple Tower’s 300mm foundry capacity. Currently the company has capacity in the Uozo fab of approximately 8,000 wafers per month and at full capacity Tower expects the STMicro fab to add at least another 16,000 per month. This could equate to another $300-$400 million a year in incremental 300mm sales. Tower expects to reach half capacity by 2024 with production starting at the end of 2022 and building. Since this is a new fab, we expect gross margins to initially be slightly higher than the corporate average 20%, and not at the over 50% one might expect for incremental sales at older fabs.

The two will share a cleanroom but Tower will install its own equipment in one third of the total space. Equipment will begin to be installed later in 2021. Operations will continue to be managed by ST with help from Tower. First 130, 90 and 65nm processes for smart power, analog mixed signal and RF processes will be qualified in R3. Both companies are targeting the automotive, industrial and personal electronics markets but Tower’s focus will be on 65nm for analog RF, power platforms, and displays. Tower will establish a wholly owned Italian subsidiary.

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