Tower Semiconductor Licenses DSP Group's Teak DSP Core for Fab 2

To be used in cellular communication, multimedia, digital cameras and speech/audio applications

MIGDAL HA'EMEK, Israel & SANTA CLARA, Calif.--(BUSINESS WIRE)-- Jan. 2, 2002--Tower Semiconductor Ltd., a leading Semiconductor specialized foundry in Israel, (Nasdaq: TSEM; TASE: TOWER) and DSP Group, Inc. (Nasdaq: DSPG - news) the leader in the development and licensing of high-performance, low-power, digital-signal-processor (DSP) cores, today announced that Tower Semiconductor has licensed DSP Group's Teak®DSP Core.

"This agreement significantly expands our Semiconductor Intellectual Property (SIP) offering in Fab 2. Customers for our state-of-the-art 0.18 micron Industry Standard process technology will be provided with a fully ported, silicon validated Teak core," said Mr. Ishai Nachumovsky, Tower's Senior Director of Foundry Technologies. "The agreement will play a major role in enhancing Tower's LSI offerings in applications where high-performance signal processing is required, and provide Tower's customers with a competitive edge, shorter design cycle, and easy integration of a leading DSP core into their Systems-on-a-Chip (SoC) designs" he added.

"We are very pleased with Tower's choice to offer our technology to its customers for their designs and consider it a vote of confidence for our advanced DSP technology." said Mr. Issachar Ohana, VP Sales of DSP Group's Technology Licensing Division. "We believe that the unique combination of high performance, low-power dual-MAC architecture with Tower's high-end process will offer great benefits to the two companies' customers," he added.

Teak DSP Core, SmartCores(TM) family fourth generation core, is a high-performance, 16-bit fixed-point DSP core using a Dual-MAC (multiply-accumulate) architecture that enables a peak performance of 420 MIPS. Teak has a parallel instruction capability and performs high-speed interrupts and fast context switching. It also includes an extended program addressing space and parallel instructions that accelerate the performance of various DSP algorithms. Teak is known for its code compactness, and has excellent program memory utilization that reduces the die cost. Teak also has special proprietary mechanisms designed to reduce power consumption and other micro-architecture modifications. Teak was designed for use in DSP-based ASICs, is fully code-compatible with DSP Group's OakDSPCore® and TeakLite® and offers a natural migration path for designs made using previous generation cores, but which require a higher level of performance.

This core complements Tower's portfolio of building blocks for implementation of high-end processing, imaging, storage and multimedia applications: embedded flash and EPROM blocks, embedded CMOS Image Sensors, Mixed Signal capabilities, a variety of compiled ROM and SRAM options and comprehensive standard cell and I/O libraries.

About Tower Semiconductor and its New Fab

Tower Semiconductor Ltd. is an independent wafer manufacturer, strategically focused on advanced Flash memory and CMOS Image Sensor technologies. Tower provides manufacturing and turnkey services for integrated circuits (IC) on silicon wafers in geometries from 1.0 to 0.35 micron, using its advanced technological capabilities and the proprietary designs of its customers. For additional information regarding Tower, please visit www.towersemi.com.

Tower is now building an advanced Fab facility adjacent to its current facility in Migdal Haemek, Israel. When completed, the new fab, referred to as "Fab 2", will employ approximately 1,000 employees and produce up to 33,000 200-mm wafers per month in geometries of 0.18 micron and below, using advanced CMOS technology from Toshiba.

About DSP Group, Inc.

DSP Group, Inc., is a global leader in the development and licensing of high-performance, cost-effective, licensable DSP cores. The company's family of DSP cores provides ideal solutions for low-power, cost-effective applications, such as cellular, broadband communications, VoIP, multimedia, advanced telecommunications systems, disk-drive controllers, and other types of embedded-control applications. By combining its DSP core technologies with its proprietary, advanced speech-processing algorithms, DSP Group also delivers a wide range of enabling, application-specific integrated circuits for full-featured, integrated-telephony products and applications, including spread spectrum wireless technologies. DSP Group maintains an international presence with offices located around the globe. More information about DSP Group is available from its Web site at http://www.dspg.com.

Teak, TeakLite, OakDSPCore and SmartCores are trademarks or registered trademarks of DSP Group, Inc. Other brands and products referenced herein are the trademarks or registered trademarks of their respective holders.

Tower`s Safe Harbor

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. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the satisfaction of the conditions under the agreements with the Fab 2 equity and wafer partners, the Israeli Investment Center and Tower's banks, (ii) obtaining additional financing for the Fab 2 project from equity and/or wafer partners, (iii) completing the construction of a new wafer manufacturing facility, (iv) conditions in the market for foundry manufacturing services and in the market for semiconductor products generally, (v) the successful completion of the development and/or transfer of advanced CMOS process technologies to be utilized in Tower's existing facility and in Fab 2, (vi) obtaining additional business from new and existing customers, (vii) market acceptance and competitiveness of the products to be manufactured by Tower for customers using these technologies and (viii) the ramp-up of production at Fab 2. A more complete discussion of certain risks and uncertainties that may affect the accuracy of these statements, and Tower's business generally, is included at "Item 3. Key Information--Risk Factors" in Tower's most recent Annual Report on Form 20-F and under the caption "Safe Harbor" in Tower's October 31, 2001 third quarter earnings press release included in Tower's report on Form 6-K for the month of October 2001, as filed with the Securities and Exchange Commission.

This press release and prior Tower press releases are available at www.towersemi.com

DSP Group's Safe Harbor

This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements made by Mr. Ohana about the Company's high-performance Teak DSP Core, the advantages that the Teak DSP Core provides to the Company's existing and potential customers, the success of the licensing arrangement with Tower. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. In addition, the events described in these forward-looking statements may not actually arise. The Company's expectations and perceptions about the Teak DSP Core, the advantages that the Teak DSP Core provides and the licensing arrangement with Tower could differ materially from those described in this press release as a result of various factors, including, the ultimate compatibility of Teak DSP Core technology and Teak DSP Core with technologies and needs of Tower, market acceptance by the Company's existing and potential customers, the timing of product deliveries, the Company's ability to further develop and enhance the Teak DSP Core to differentiate it from the Company's competitors at cost-effective prices and in a timely manner, the introduction of competing products and technology and the general market demand for products that incorporate the Company's DSP technology. For a further discussion of such factors, see the information provided under the heading "Factors Affecting Future Operating Results" in our quarterly report on Form 10-Q for the quarter ended September 30, 2001, which was filed with the Securities and Exchange Commission on November 13, 2001 and is also available on our Web site (www.dspg.com) under Investor Relations.

     Tower Semiconductor Ltd.
     Tamar Cohen, +972-4-650-6998
     Fax: +972-4-654-7788
     pr@towersemi.com
     www.TowerSemi.com
     or
     DSP Group, Inc.
     Bat-Sheva Ovadia, +972-9-952-9616
     e-mail: batsheva@dsp.co.il