Tower in Talks to Buy Micron Plant in Kiryat Gat

Workers jobs are safe for now, but Micron told employees that it will either sell or close down the plant by 2015.

Dror Raich
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Dror Raich

Tower Semiconductor is negotiating the purchase of Micron Technology's production facilities in Kiryat Gat. TheMarker reported last month that Micron told the 1,300 workers employed at the plant of its intentions either to sell the plant or close it down by 2015, but that in the meantime no layoffs were expected. The plant specializes in producing 45 and 65 nanometer memory products.

To sweeten a potential deal, Micron has been promising to supply the buyer with several years' worth of production orders. The plant, one of Israel's oldest microchip producers, was built by Intel in 1999 to produce its Pentium chips. The plant was acquired by Micron in February 2010 when Micron bought Numonyx, another semiconductor company making flash memories. Tower Semiconductor, based in Migdal Ha'emek, manufactures semiconductors and integrated circuits for the electronics industry.

The deal seems to be taking shape along similar lines to Tower's purchase of a Micron plant in Nishiwaki, Japan for $140 million in June 2011, which included Micron receiving a 6% share in Tower stock. That deal also involved a guaranteed order backlog as well as converting production to analog technology to adopt it to Tower's specialty product line.

TowerJazz, as the company is also known, refused to say how negotiations are progressing but issued the following official response: "We are always examining possibilities, and if something substantial arises, we'll report it."

Tower trades on Nasdaq and the Tel Aviv Stock Exchange at a company value of NIS 690 million and is a producer of analog microchips for the electronics industry. The company reported revenues of $155 million in the third quarter of 2012, a 12% drop from the previous year's parallel quarter.

For the same period, Tower reported net earnings of $32 million, unchanged from the previous year, representing a 20% profit margin as opposed to 18% in the parallel period. Its cash resources, however, increased to $161 million from $101 million at the end of 2011.

The Micron microchip plant in Kiryat Gat.Credit: Eliyahu Hershkovitz

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