Tower Semiconductor in Advanced Negotiations for Restructuring Agreement to Significantly Improve Its Balance Sheet and Reduce Its Level of Debt

Jazz Technologies Merger Is On Track for Closing

MIGDAL HAEMEK, Israel — August 7, 2008 — Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM), a pure-play independent specialty foundry, today announced that it is currently in advanced stages of negotiation of a restructuring arrangement of its long-term debt with its lender banks, Bank Leumi and Bank Hapoalim, and one of its major shareholders, Israel Corporation Ltd.  The restructuring will include a substantial reduction in the level of the Company’s debt to its banks and Israel Corporation, deferrals of remaining principal and interest, and a waiver from compliance with financial covenants for an extended period of time. This arrangement will also include an investment in the Company by Israel Corporation. The Company expects that these negotiations, currently in an advanced stage, will result in an improved balance sheet and reduced level of debt. There can be no assurance that an agreement will be concluded. 

As previously announced, in connection with the joint press release dated May 19, 2008, announcing that the Company and Jazz Technologies, Inc. (AMEX: JAZ) entered into a definitive agreement and Plan of Merger and Reorganization, Jazz has set August 8, 2008 as the record date for a Special Meeting of Stockholders to vote on, approve and adopt the merger.  The Company is in the process of filing an amendment to its Form F-4 with the SEC together with a request for effectiveness.

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. Boasting 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.

About Jazz Technologies and Jazz Semiconductor
Jazz Technologies(TM) (AMEX: JAZ) 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 mixed-signal 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.