Business Context and Reporting Period
Company: Tower Semiconductor Ltd. (operating as TowerJazz)
Filing Type: Form 6-K
Date: April 14, 2010
Context: TowerJazz, a global specialty foundry leader, announced a strategic silicon partnership with Tego, Inc. to manufacture high-memory passive Gen2 RFID chips (TegoChip) for the aerospace industry.
Key Financial Metrics
This filing is a current report regarding a corporate announcement and does not contain financial statements. Consequently, specific values for revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes and Strategic Developments
- New Partnership: TowerJazz was selected by Tego as the silicon partner to manufacture the TegoChip using TowerJazz's 180nm process (TS18).
- Major Customer Application: The chips will be used to tag over 1,500 pressurized and non-pressurized parts on the Airbus A350 XWB aircraft fleet.
- Market Significance: The contract with Airbus represents the first worldwide, open-loop application for high-value passive RFID tags, enabling advanced Maintenance, Repair & Overhaul (MRO) applications.
- Industry Outlook: Citing Gartner analysts, the filing notes that global RFID revenue is projected to reach $3.5 billion by 2012.
Management Commentary and Risks
Management Commentary:
- Tego CEO Timothy Butler: Selected TowerJazz for their expertise in process technologies, IP for RFID applications, and proven ability to provide low-power, non-volatile memory for harsh environments.
- TowerJazz VP Avi Strum: Expressed pleasure at the selection, noting that RFID tags enable asset management and supply chain efficiency across retail, defense, transportation, and healthcare sectors.
Risks and Contingencies:
- The filing includes a "Safe Harbor" statement regarding forward-looking statements, noting that actual results may vary due to risks and uncertainties.
- Specific risk factors are referenced in TowerJazz's most recent Forms 20-F, F-3, F-4, and 6-K, as well as Jazz Semiconductor's Forms 10-K and 10-Q.
- The company disclaims any obligation to update the forward-looking information contained in this release.
Investor Verification Checklist
- Verify the commercial terms and volume commitments of the partnership between TowerJazz and Tego.
- Confirm the production timeline for the TegoChip on the 180nm (TS18) process.
- Review the "Risk Factors" section in the most recent Form 20-F for details on market volatility and customer concentration.
- Assess the impact of the Airbus contract on TowerJazz's overall revenue mix for the specialty foundry segment.
- Monitor the deployment of the TegoChip technology at the RFID Journal LIVE conference (April 14-16, 2010) for market reception.