Q1 What were the big changes at Tower over the last ten years?
"There have been multiple phases of change. The first big change was the drive to become profitable," said Ellwanger.
"When I arrived, the company wasn't market driven. The company had $100 million in sales and negative EBITDA of $20 million and negative $55 million cash flow from operations and was $550 million in debt [EBITDA is earnings before interest, tax, depreciation. and amortization]."
"Before I arrived it had a central R&D group and design center in Israel and a sales office in Santa Clara, California. We had to decentralize the product lines and give each line a general manager. We targeted a positive EBITDA by the fourth quarter of 2005 and positive cash flow by 4Q06. The teams worked incredibly hard and we did hit those two financial goals."
Ellwanger explains that the second phase was dropping digital work and focusing the company on analog, RF and sensors. Over the years 2005 to 2008 things gradually improved for Tower but aside from CMOS image sensors the company was still generally a second or third source of digital circuits manufactured using 130nm or 90nm CMOS. SanDisk, for whom Tower made flash memory controller ICs, was the biggest customer. "So we told SanDisk we would have to raise prices."
This was not an easy conversation because Eli Harari, chairman and chief executive officer of SanDisk at the time had also been a director of Tower and instrumental in bringing in Ellwanger.
Next: All that Jazz