Tower Semiconductor Announces Receipt of a $2 Million Investment for Fab 2

MIGDAL HAEMEK, Israel--(BUSINESS WIRE)--Jan. 9, 2002--Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TOWER), today announced that it has received a $2 million investment from an investor with whom the Company is expected to develop strategic relations, in exchange for the issuance of 332,945 Ordinary Shares.

The investment was made at a price per share of $6.007, which represents the average closing price of Tower's shares on the Nasdaq National Market over the course of the thirty trading days prior to the execution of the investment agreement.

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.

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

     Tower Semiconductor Ltd., Migdal Haemek
     Tamar Cohen, 011-972-4-650-6998
     Fax: 011-972-4-654-7788
     pr@towersemi.com
     www.TowerSemi.com