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To: Steve Porter who wrote (23296)	1/28/1998 9:18:00 PM
From: Vic Breck	Respond to of 33344

MIGDAL, HAEMEK, Israel-- - Also Announcing Wafer Purchase Agreement with National Semiconductor - Tower also announced today the signing of a wafer supply agreement with National Semiconductor Corporation for a period of two years with a one year extension option. The agreement extends the foundry relationship between the companies until at least February 28, 2000. Under the terms of the new agreement, Tower will allocate a certain level of manufacturing capacity for the production of silicon wafers for National. National will continue to utilize Tower's existing technologies as well as Tower's new technology for embedding non-volatile memories on logic devices. "We are proud to have achieved record-high sales in 1997," said Dr. Yoav Nissan-Cohen, Co-Chief Executive Officer of Tower. "This is an excellent achievement, especially considering the very competitive market for semiconductor manufacturing services in 1997. As we anticipated, fourth quarter sales, gross margin and net income declined compared to the previous quarter. This was mainly related to fewer manufacturing days due to the Jewish holidays in October and partial impact of the reduction in orders towards year end." Dr. Nissan-Cohen added: "The full impact of the reduced orders will be reflected in our financial results in the first half of 1998. However, as a result of our efforts to obtain new business, we see strong prototype activity for new products from both existing and new customers. We believe that these new products, particularly our specialized products such as the embedded EPROM, Mixed-Signal and Image Sensor products, will result in increased orders going into the second half. We also are pleased with National's decision to continue working with Tower in a variety of process technologies, and with Fairchild's decision to cooperate with us on the introduction of Tower's highly advanced Flash technology." TOWER SEMICONDUCTOR LTD. is an independent semiconductor contract manufacturer and service provider of semiconductor integrated circuits ("ICs") on silicon wafers. As a foundry, Tower provides IC design, manufacturing and turn-key services, using advanced production capabilities and the proprietary IC designs of its customers, and is specializing in providing solutions for embedded non-volatile memory devices. ICs manufactured by Tower are incorporated into a wide range of products in diverse and rapidly growing markets, including computer and office equipment, communication products and consumer electronics.