The share price of Migdal HaEmek-based Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) jumped over 3% today on the Tel Aviv Stock Exchange (TASE), after the company reported that it had signed an agreement extending its partnership with Japanese electronics giant Panasonic for three years until 2022.
As part of the agreement, Panasonic will continue buying products for its semiconductor business from the three production facilities in Japan of TPSCo, the two companies' joint venture. The two companies founded TPSCo, of which Tower holds 51%, to produce chips in Japan in 2014.
Tower's announcement indicates that the quantity of products that Panasonic will manufacture at the company's facilities will remain at the same level, but with a new price structure that will reduce sales by $20 million a quarter.
The companies nevertheless believe that the effect on both the revenue and the profit margin of the joint venture will be neutralized through implementation of streamlining measures at the plants, combined with an increase in sales to third parties, including a substantial rise in sales with advanced 300-millimeter technology, on which profit margins are high.
Tower CEO Russell Ellwanger said, “The TPSCo partnership has brought together two leaders - Panasonic, an acknowledged analog components and systems leader, and TowerJazz, a recognized analog foundry leader- having created a company that serves and continues to grow the analog foundry space as no other existing single foundry can. During the past five years, we have continued to grow in respect for the technical capability and appreciation for the business acumen and can-do attitude of our Panasonic partner."
Published by Globes, Israel business news - en.globes.co.il - on March 26, 2019
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