LONDON Alliance Semiconductor Corp. (Santa Clara, Calif.) has become the latest company to sign up as an equity partner in Tower Semiconductor Ltd. as part of Tower's plans to build a second wafer fab in Israel.
Tower (Migdal Haemek, Israel), the leading independent foundry in Europe, said Alliance would invest $75 million in return for a minority stake in Tower, plus a seat on the company's board of directors and the commitment of production capacity from the 8-inch wafer fab that Alliance's investment is intended to help finance.
Although Tower is awaiting the official confirmation of Israeli government grants for the fab, it has received assurances from the Israeli prime minister that the government is prepared to support the company, Tower said. The company plans to start building Fab 2 this year. Tower's plan to finance the $1.5 billion wafer fab from a mixture of equity disposals, government grants, bank loans and its own trading, has been taking shape throughout this year.
Crucial to the plan is Toshiba Corp.'s agreement to license to Tower several generations of CMOS process technology to Tower. Toshiba agreed in March to invest $10 million in Tower's planned fab and to license 0.18-micron through 0.13-micron CMOS process technologies to Tower.
Separately, SanDisk Corp. (Sunnyvale, Calif.) announced in July that it would take a minority stake in Tower as part of a significant restructuring of Tower's ownership.
Now Alliance is paying an identical sum and appears to have broadly similar terms and conditions as SanDisk. Tower is looking for about six such partners a move that would raise about $450 million.
In announcing the latest agreement, N.D. Reddy, chairman, president and chief executive officer of Alliance, said, "We are very excited about entering into this partnership with Tower. This partnership will provide Alliance with access to Tower's unique Microflash technology for standard and embedded applications for the next generation of communication products at 0.18- to 0.13-micron technologies, as well as guaranteed wafer capacity."
Microflash is a non-volatile memory technology intended for embedded use that Tower developed with Saifun Semiconductor Ltd., an Israeli company that specializes in flash memory development.
Yoav Nissan-Cohen, Tower's co-chief executive officer, said, "I am pleased to announce that Alliance will now join SanDisk and Toshiba as an investor and partner in our new fab. Alliance's position as a fabless [supplier], specializing in the memory and memory-intensive logic designs, is an excellent fit to our new fab strategy.
"We expect that, within the coming weeks, the [Israeli] government grant will be approved and additional wafers partners will join the project, which will enable us to start the construction of the new fab," Nissan-Cohen said.