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JV agreement with Panasonic signals big gains for TowerJazz

Posted: 03 Apr 2014 ?? ?Print Version ?Bookmark and Share

Keywords:TowerJazz? Panasonic? JV?

TowerJazz has embarked on a joint venture with Panasonic Corporation to consolidate their Japanese operations, with an annual revenue expectation of $900 million. The ownership is shared at a 51:49 ratio, with TowerJazz holding majority of the shares.

The agreement covers the transfer of Panasonic's 8 inch semiconductor manufacturing process and tools at three of its Hokuriku factoriesUozu, Tonami and Araito the JV. This will enable TowerJazz to leverage the 300mm technology fab, which includes the following: 65nm CMOS image sensor dark current and quantum efficiency performance, additional 45nm digital technology, and added available capacity of approximately 800,000 wafers per year in the mentioned factories.

The JV will continue the production of Panasonic's semiconductor processes as Panasonic's subcontractor as well as seek to expand operations by leveraging TowerJazz's customers and businesses to capture out-of-group sales.

TowerJazz will terminate its operations at the Nishiwaki facility in the course of restructure and rationalisation of its Japan manufacturing and business plans. This is expected to cut its annual fixed costs by approximately $130 and add $400 million in its total annual revenue.

Notwithstanding the termination, TowerJazz has retained the services of a Japanese outplacement company to facilitate continued employment to the remaining employees. Products of key customers, currently being manufactured at the Nishiwaki facility, will be transferred into the company's other worldwide factories.

As consideration for its 51 per cent equity holding in the JV, TowerJazz issued to Panasonic 870,454 ordinary shares, about 1.8 per cent, making Panasonic its minor stakeholder. The shares are valued at $7.5 million, which was calculated based on TowerJazz's average share price during the 15 trading days period that ended March 27.

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