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News Article

Tower to slash 170 jobs in bid to cut costs

Israeli pure-play wafer foundry Tower Semiconductor has announced plans to lay off 170 workers – 12 per cent of its workforce – as part of a series of measures aimed at cutting overheads.

Israeli pure-play wafer foundry Tower Semiconductor has announced plans to lay off 170 workers – 12 per cent of its workforce – as part of a series of measures aimed at cutting overheads.

The changes are due to be put into practice by the end of the year and are expected to save the company $20 million annually.

Chairman and chief executive Carmel Vernia said that the independent firm had taken the “tough decision” to slash its workforce in response to “short-term market conditions, recent financial results and an industry-wide inventory correction”.

“Todays actions are a result of Towers continual examination of every aspect of our business,” he said.

Tower – one of the smallest players in the foundry sector – has struggled to make a mark since it was set up in 1993. The troubled company has never made an annual profit and has been hit hard by the recent slowdown in growth in the semiconductor market.

According to its most recent financial statement, the company made a loss of $4.3 million in the third quarter of 2003, despite increasing revenues by 118 per cent (to $35.1 million) over the corresponding period in 2003 ($16.1 million).

I more bad news for Tower, companys vice president and chief financial officer Amir Harel resigned at the start of the month. The CFO role has temporarily been taken on by Oren Shirazi while the company searches for a permanent replacement.

Despite the layoffs and less than dazzling financial results, Vernia remains confident that the company can achieve a positive EBITDA (earnings before interest, tax, depreciation and amortisation) by 2005.

“We are maintaining our positive long term outlook for the second quarter of 2005, based on new customers that are in various stages of designing and prototyping products in our labs,” he said.

Vernia also said that the company would continue to invest in “key process development initiatives” with the aim of “improving our unique technologies, which are less affected by market conditions”.

Tower is particularly hopeful of its 0.13 and 0.18 micron processes, which it believes will be producing around 15,000 wafers a month by the first half of 2005.

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