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The chipmaker of Israel, Tower Semiconductor, has employed a Tel Aviv brokerage to find it a new backer, sources on the capital market are whispering. The company needs more cash, but at least one of its controlling shareholders, Idan and Sammy Ofer's company Israel Corporation, has had enough.

The Israel Corporation today is the second-biggest shareholder with an 11.5% stake, after SanDisk, which owns 12.8%. Capital market sources estimate that so far, Israel Corporation has invested hundreds of millions of shekels in Tower, which refused to comment for this report.

Tower, which operates in Migdal Haemek, started building its second foundry, Fab 2, about 10 years ago, at a total investment of about $1.5 billion. Fab 2 is productive, even though investment in it hasn't been completed yet. Its construction is being financed partly by the government through grants amounting to roughly $200 million, partly through bank loans - about $300 million - and the rest by the shareholders, including Israel Corporation.

Tower has asked the Ministry of Industry and Trade for about $80 million as a grant, a request that the ministry will shortly be discussing. The money is about 20% of the outstanding investment in Fab 2.

Meanwhile, sources near the company say that under the fairly new CEO, Russell Ellwanger, Tower is changing its focus from production alone: it's expanding into the actual design and development of chips. That is a material change in business plan. Recently Tower held negotiations with two Indian chip development companies, SemIndia and HCL, with the idea of forming a joint venture with one of them, which would design chips and produce them in both India and Israel. So far it's just an idea.

The main problem is that Tower hasn't made one red cent in profit from the day Fab 2 began. For the first quarter of 2008 it admitted to losing $105 million on sales that did, on the bright side, climb to $205 million. Even so, Tower recently announced the acquisition of Jazz Technologies, which makes chips of a different type than Tower offers, for $40 million.

As last week rolled to a close, Nasdaq sent Tower a "deficiency letter," saying that its share price falls short of the minimum required to stay listed on the stock exchange. The exchange gave Tower the usual 180-day period - until January 12, 2009 - to regain compliance with the minimum bid price requirement of $1.00 per share.

Tower is still traded on Nasdaq, but if its ordinary shares fail to close at $1.00 per share or more for 10 consecutive business days during that 180-day period, it may be relegated to the Nasdaq Capital Market rather than the Nasdaq Global Market. None of this affects Tower's listing on the Tel Aviv Stock Exchange.