Tower Semiconductor to Acquire Jazz Technologies

Creates the Leading Specialty Pure-Play Foundry with Trailing Twelve Month Revenues of $443 Million

• Best of breed specialty process offering of CMOS Image Sensor (visible and non-visible), Radio Frequency (RF CMOS, SiGe and BiCMOS) and Power Management (CMOS and BCD) solutions
• Operational facilities spanning the globe with three fully owned fabrication facilities in the United States and Israel and an ownership interest in a fabrication facility in China
• Significant opportunity for revenue enhancement and cost saving synergies of up to $40 million annually

MIGDAL HAEMEK, Israel and NEWPORT BEACH, Calif. (May 19, 2008) - Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), an independent specialty wafer foundry, and Jazz Technologies, Inc. (AMEX: JAZ), a leader in Analog-Intensive Mixed Signal (AIMS) foundry solutions, today announced the signing of a definitive agreement by which Tower will acquire all of the outstanding shares of Jazz in a stock-for-stock transaction valuing Jazz at a fully diluted equity value of approximately $40 million, based on Tower’s closing price on NASDAQ on May 19, 2008. Under the terms of the agreement, each outstanding share of Jazz common stock will be converted into the right to receive 1.8 Tower ordinary shares. The total value of the transaction, including net debt, is approximately $169 million.

“The acquisition of Jazz is an excellent strategic fit for Tower – it creates economies of scale which allows for improved margins and strongly complements our specialty process offering, transforming us into the leading specialty pure-play foundry,” said Russell Ellwanger, CEO of Tower. “We are confident that we will realize significant benefits and synergies, including a comprehensive process portfolio which expands our addressable market and fuels a growing and more diversified customer base with highly differentiated product platforms.”

"Over the past few months, our Board has carried out a review of various strategic alternatives to enhance stockholder value and this definitive agreement is the result of that process,” said Gil Amelio, Chairman and CEO of Jazz. “Jazz’s management looks forward to working with Tower in the coming months to successfully implement the transaction.”

“We are excited about the potential of joining together with Tower and believe Jazz’s shareholders, customers, employees and other stakeholders will benefit from the enhanced growth, profitability and cash flow prospects of the combined company,” said Paul Pittman, Chief Financial and Administrative Officer of Jazz.

Tower and Jazz are highly complementary and the transaction is expected to offer significant benefits to customers and shareholders:

• The combined company will be an industry leader, bringing together Tower’s strength in CMOS Image Sensor, Non-Volatile Memory (NVM) and RF CMOS with Jazz’s expertise in Mixed Signal, Power Management (CMOS and BCD) and RF (RF CMOS, SiGe and BiCMOS) to create one of the broadest portfolios of specialty process technologies.
• With operational facilities now spanning the globe (United States, Israel and China), the combined company offers capacity of approximately 750,000 wafer starts annually (8" equivalents).
• Revenue enhancements and increased efficiencies in manufacturing and purchasing are expected to result in substantial synergies of up to $40 million annually.

The agreement has been unanimously approved by the boards of directors of both Tower and Jazz and the transaction is subject to the approval of Jazz’s shareholders and other customary closing conditions. The transaction is expected to close in the second half of 2008.

Citi acted as financial advisor and Yigal Arnon & Co. and O'Melveny & Myers LLP acted as legal counsel to Tower. UBS Investment Bank acted as financial advisor and Cooley Godward Kronish LLP and Meitar Liquornik Geva & Leshem Brandwein acted as legal counsel to Jazz.

Conference Call and Webcast Information

Tower will host a conference call to discuss the acquisition of Jazz in conjunction with the Company’s first quarter 2008 financial results today, May 20, 2008, at 10:00 a.m. Eastern Time (ET) / 5:00 p.m. Israel time. To participate, please call: 1-800-994-4498 (U.S. toll-free number) or 972-3-918-0685 (international) and mention the ID code: TOWER. Callers in Israel are invited to call locally by dialing 03-918-0685. The conference call will also be Web cast live at http://www.earnings.com and at www.towersemi.com and will be available thereafter on both Web sites for replay for 90 days, starting at approximately 2 p.m. ET on the day of the call.

About Tower Semiconductor Ltd.

Tower Semiconductor Ltd. is a pure-play independent specialty wafer foundry established in 1993. The company manufactures integrated circuits with geometries ranging from 1.0 to 0.13-micron; it also provides complementary technical services and design support. In addition to digital CMOS process technology, Tower offers advanced mixed-signal & RF-CMOS, Power Management, CMOS image-sensor and non-volatile memory technologies. To provide world-class customer service, the company maintains two manufacturing facilities, each with standard and specialized process technology processes: Fab 1 ranging from 1.0 to 0.35 and Fab 2 featuring 0.18 and 0.13-micron. Tower's web site is located at http://www.towersemi.com.

About Jazz Technologies and Jazz Semiconductor

Jazz Technologies(TM) (AMEX:JAZ - News) is the parent company of Jazz Semiconductor, Inc., a leading independent wafer foundry focused on Analog-Intensive Mixed-Signal (AIMS) process technologies. The company's broad product portfolio includes digital CMOS and specialty technologies, such as RF CMOS, Analog CMOS, Silicon and SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage CMOS. These technologies are designed for customers who seek to produce analog and mixedsignal semiconductor devices that are smaller and more highly integrated, power-efficient, feature-rich and cost-effective than those produced using standard process technologies. Jazz customers target the wireless and high-speed wireline communications, consumer electronics, automotive and industrial end markets. Jazz’s executive offices and its U.S. wafer fabrication facilities are located in Newport Beach, CA. Jazz Semiconductor also has engineering and manufacturing support in Shanghai, China. For more information, please visit http://www.jazztechnologies.com and http://www.jazzsemi.com.