Long time talking in the chip company Tower On the desire to increase production capacity, especially in technologies with a diameter of 300 mm. Today the company updated on a significant agreement in the field: Tower will cooperate with the chip giant STMicroelectronics for mass production in a 300 mm plant in Italy.
Under the agreement, ST will attach Tower to the project to build a new manufacturing plant in Agraetta, Italy – a plant that began construction in 2018 and is in advanced stages. The collaboration is intended to accelerate the process of increasing production capacity, and the company notes that the plant is expected to start production in the second half of 2022.
For Tower, the agreement includes investments in equipment in substantial amounts as the project progresses – over $ 500 million over a number of years, with about $ 100 million to be invested next year; But also a significant revenue potential estimated at $ 350-500 million a year when the pub is fully operational. Tower shares respond positively to the report and rise sharply on the Tel Aviv Stock Exchange.
The two companies will share the clean room areas and the overall production line-up, with each company investing separately in its equipment relative to its share. As part of the project, Tower will install production equipment on one-third of the clean room surface. The companies will cooperate in the process of training the factory and the technologies in order to start production and increase production capacity as quickly as possible. Tower will move its staff from Israel and recruit more workers.
“We have long announced that we are looking to increase capacity, and that we are limited in our ability to supply all demand – even before the huge demand this year, and certainly now,” Avi Strum, CEO of Tower’s Sensors Division, told Globes today. Really, and this opportunity was fantastic, since ST started the project back in 2018 and the structure is already built. Now the equipment is already being put in and it is progressing very nicely. The problem with building a pub (manufacturing plant) from the beginning is that it takes 3 years from the decision to build and until we start generating income from it, we were looking for shorter times and it suited us like a glove. “
On the other hand, he says, ST’s interest is to fill the pub as quickly as possible so that it becomes profitable. “If at the same time we take some of the capacity, the pub will be almost full from the start and both sides will make money from the low cost per wafer. It’s a win-win situation.”
Through this move, Tower will triple its production capacity in the 300mm range. According to Strum, the customers in the field are customers from the RF field that today Tower provides them with what is needed from Japan, customers from the display field and Power Management. “We can provide customers Goddess from both Japan and the new pub, “he notes.
Russell Elwanger, CEO of Tower, said regarding the new agreement that “We are very pleased and excited to announce the signing of this agreement for cooperation with ST. ST is a company known worldwide for its advanced and leading technologies, operational excellence and business integrity. We are very much looking forward to our cooperation and mutual success. The large market shares that the 300mm tower already has in the analog technologies RF, power, displays and more, will increase significantly thanks to this significant increase in the company’s production capabilities – which triples our production capacity by 300mm, thus allowing us to give Responding to the growing demand of our customers for these growing market shares. “