Tower wants to build China fab

February 21, 2017 // By Peter Clarke
Specialty pure-play foundry Tower Semiconductor Ltd. (Migdal Haemek, Israel) is considering how it can build a greenfield wafer fab in China as well as other moves such as expanding into MEMS and sensor production.

The company, which trades as TowerJazz, has expanded in recent years by acquiring IDM legacy fabs and order books. Its strengths lie in power management, RF and image sensor chips as well as some discretes for its customers. However, deals to take over existing wafer fabs, while common in the western hemisphere, are not readily available in China. China is the global hot spot for wafer fab building because of the high volume of electronic equipment assembled in China and Chinese state policy to increase China's domestic chip manufacturing.

Notably Tower's latest statement of an interest in building a wafer fab in China, comes just days after rival Globalfoundries Inc. (Santa Clara, Calif.) said it would do exactly that by working with the Chengdu municipality as a source of finance. Tower's CEO Russell Ellwanger said the Israel foundry would likely follow a similar business model.

Tower enjoyed a successful 2016 with revenue growth of 30 percent compared with 2015 (see Foundry Tower reports record financial year) and expects similar growth going forward, which could make 2017 a year when further capacity expansion needs to be set up.

In a telephone conference with analysts held to discuss the financial results, Ellwanger said that if growth continues at the present rate additional manufacturing capacity will need to be put in place during 2017 and into 2018. Ellwanger confirmed that Tower is pursuing a strategy in China that would likely involve a greenfield site but that it also remains open to acquiring a legacy manufacturing facility particularly where that makes sense with an existing IDM customer. He also said Tower was open to getting into MEMS and sensor manufacturing on a bigger scale.

Ellwanger told eeNews Europe in May 2015 that Tower was seeking a manufacturing opportunity in China (see Tower seeks fab deal in China).

Next: More detail