New deal in Korea sends Tower soaring

The deal with C&S Technology, which supplies Hyundai & Kia, is estimated to be worth $20 million annually.

Specialty foundry Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) yesterday announced a new deal in South Korea, this time to provide processors for power automotive devices. Tower did not disclose the value of the deal, but industry sources estimate that it will be worth about $20 million annually to Tower from 2014.

Fabless Korean semiconductor company C&S Technology Inc. (KSX: 38880) selected Tower's 0.35-micron power management 60V solution for use in audio and video multimedia solutions for Hyundai Motor Company (KRX: 5380) and Kia Motor Company. C&S Technology is the official supplier of these systems to the two carmakers. The device can integrate multiple integrated circuits that are typically independent within the vehicle, resulting in a more cost-effective solution. As this IC is being designed for current models of automobiles, the volume ramp will be several years sooner.

Tower's share rose 26.2% on Nasdaq yesterday to $1.18, giving a market cap of $188 million. The share rose 4% in early trading on the TASE today to NIS 4.40, after rising 20.8% yesterday.

Tower will supply its Bipolar-CMOS-DMOS (BCD) power management process to C&S Technology. Tower noted that South Korean fabless companies are focusing on utilizing the innovation and accumulated design capabilities to strengthen their competitiveness in both the automotive and integrated circuit markets, reducing its reliance on overseas suppliers. As more vehicles are being equipped with power, multimedia and network devices, the demand for automotive chips will increase. The percentage of electronic parts used in vehicles is expected to reach 40% by 2015 and over 30% will have semiconductors.

Tower has targeted Korean fabless companies for new processors developed and produced at the company's Fab2 in Migdal Ha'Emek. In the past couple of months, it has signed contracts with GrandTek Technology Co. Ltd., SemiHow Co. Ltd., and Dongwoon Anatech Ltd.

Published by Globes [online], Israel business news - - on October 13, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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