Tower Semiconductor Wins High-Volume Manufacturing Deal for Fab2 at the 0.13um Technology Generation

• Expects Sales of Thousands of Wafers-Per-Month to First-Tier U.S. IDM Which Could Become One of Tower’s Top Three Customers
• Technology Transfer to Commence Next Quarter; Production Shipments Expected to Begin by End of 2008

MIGDAL HAEMEK, Israel -- September 20, 2007 -- Tower Semiconductor Ltd., a pure-play independent specialty foundry today announced that it has won a multi-million dollar per month manufacturing deal for its Fab2 at the 0.13-micron technology generation from a first-tier, U.S. integrated device manufacturer (IDM). Under this deal, technology will be transferred during the coming several quarters after which Tower expects to manufacture between five and eight thousand wafers-per-month, utilizing the new tools it is purchasing from companies such as AMD and Intel, as was previously announced.

The high-volume production shipments are expected to commence towards the end of 2008. Following such production, Tower expects that the U.S. IDM could become one of Tower’s top three customers.

“We are pleased, and feel it quite an achievement, that an IDM of this size, capability and reputation chose Tower to be its foundry partner for a critical and projected very large volume family of products,” said Tower’s CEO, Russell Ellwanger. “We are excited that this product line will utilize our expanded manufacturing capacity in the advanced 0.13-micron technology. We are in advanced stages of closing the deals to acquire the additional tools needed to increase our capacity in Fab2 to a level that will meet this demand.”

About Tower Semiconductor Ltd.:

Tower Semiconductor Ltd. (Nasdaq:TSEM)(TASE:TSEM) is an independent specialty foundry that delivers customized solutions in a variety of advanced CMOS technologies, including digital CMOS, mixed-signal and RF (radio frequency) CMOS, CMOS image sensors, power management devices, and embedded non-volatile memory solutions. Tower’s customer orientation is complemented by its uncompromising attention to quality and service. Its specialized processes and engineering expertise provides highly flexible, customized manufacturing solutions to fulfill the increasing variety of customer needs worldwide. Offering two world-class manufacturing facilities with standard and specialized process technologies ranging from 1.0- to 0.13-micron, Tower Semiconductor provides exceptional design support and technical services to help customers sustain long-term, reliable product performance, while delivering on-time and on-budget results. More information can be found at http://www.towersemi.com.