CEO interview: Specialty foundry Tower gains momentum

September 26, 2017 // By Peter Clarke
Specialty foundry Tower Semiconductor Ltd. (Migdal Haemek, Israel), which trades as TowerJazz, continues to prosper under the stewardship of CEO Russell Ellwanger. eeNews Europe asked him about next technologies and manufacturing locations.

Revenue in the first half of 2017 was a record $675 million, up 16 percent on the first half of 2016 and being driven by strong demand with additional manufacturing capacity coming on-stream in the United States and Japan. Gross and operating profit for the first half of 2017 were a record of $176 million and $110 million, respectively, increased as compared to $134 million and $71 million, respectively, in the first half of 2016.

So eeNews Europe asked Ellwanger for an update on Tower's progress; a follow up to an interview we conducted a couple of years ago (see CEO interview: What's next after Tower's turn-around?)

All good so far considering Tower had annual sales of about $100 million with a loss of twice that size in 2005, the year that Ellwanger was appointed, and reached $1.25 billion in 2016. "Yes we've had 10 or 11 years of growth. The growth percentage has been high but we were coming from a low base," said Ellwanger. In fact, Tower's compound annual growth rate is above 25 percent and the period covers a number weak years for the semiconductor sector as a whole.

But has that been allowed because the competition from mainstream foundries against the specialists has diminished in recent years?

It was the case that larger pure-play foundries had a plan to redeploy their older wafer fabs to making More-than-Moore processes as they were bringing up new wafer fabs to do leading-edge digital IC manufacturing. But perhaps the demands of developing those very expensive, deep nanometer processes kept those big foundries occupied and gave smaller foundries, such as Tower, a chance to grow.

"There are several foundries that do deep digital following Moore's Law and TSMC is at the leading edge. They also have a very good analog offering," commented Ellwanger. But Ellwanger also points out that the number of More-than-Moore manufacturing process offerings is extremely broad and that Tower rarely sees TSMC as a competitor in the market.

Next: Three sectors