טאואר סמיקונדקטור בע"מ

)" חה ברה"(

תשקיף מדף

)"התשקיף או "תשקיף המדף"(

מכוח תשקיף מדף זה, תוכל החברה להנפיק סוגי ניירות ערך שונים, בהתאם להוראות הדין - מניות רגילות של החברה )"מניות החברה"(, אגרות חוב שאינן ניתנות להמרה )לרבות בדרך של הרחבת סדרות קיימות של אגרות חוב של החברה, כפי שיהיו מעת לעת(, אגרות חוב הניתנות להמרה למניות החברה )לרבות בדרך של הרחבת סדרות קיימות של אגרות חוב הניתנות להמרה למניות החברה, ככל שיהיו, ומעת לעת(, כתבי אופציה הניתנים למימוש למניות החברה, כתבי אופציה הניתנים למימוש לאגרות חוב ולאגרות חוב הניתנות להמרה למניות החברה וניירות ערך מסחריים )"ניירות הערך"(.

הצעתם של ניירות הערך על-פי תשקיף מדף זה, תיעשה בהתאם להוראות סעיף 23א)ו( לחוק ניירות ערך, התשכ"ח1968- )"חוק ניירות ערך"(, ותקנות ניירות ערך )הצעת מדף של ניירות ערך(, התשס"ו – 2005 )"תקנות הצעת מדף"( , באמצעות דוחות הצעת מדף, בהם יושלמו כל הפרטים המיוחדים לאותה הצעה לרבות הרכב היחידות המוצעות, בהתאם להוראות כל דין ובהתאם לתקנון ולהנחיות הבורסה לניירות ערך בתל-אביב בע"מ )"הבורסה"(, כפי שיהיו באותה עת )כל אחד מהדוחות הללו יקראו " : דוח הצעת המדף"(.

להלן תמצית גורמי הסיכון העיקריים שיש בהם כדי להשפיע על החברה )לצורך פסקה זו ההתייחסות הינה לחברה, כולל חברת טאואר יו. אס. הולדינג ס אינק ,' חברה בת בבעלות מלאה של החברה שמושבה בארה"ב, וחברות הבת שלה, בכללן טאואר סמיקונדקטור ניופורט ביץ' אינק , וטאוארסמיקונדקטור סאן אנטוניו, אנק'. , וחברת טאוארג פאנ 'אז אסוניקסמיקונדטורבע"מחברהבת בבעלות 51%שלהחברה -ו 49% בבעלות פא אנ סוניק סמיקונדקטור סולושן שמושבה ביפן :(

להלן רשימת גורמיסיכון הקשוריםלפעילות החברה, שעלולים להשפיע לרעה על תוצאותיה הכספיות, מצבה הפיננסי או /ו עסקיה: (1) תהליך הייצור המורכב, כולל הצורך להשיג ביצועי מוצר טובים, לעמוד ב זמני אספקה מקובלים ולהשיג מוצרים עם שיעורי תנובה גבוהים (2; ) הביקוש לשירותי היי צורשלהחברה ה , תלויבביקוש בשווקי הקצה של לקוחותהחברה ,שהםבדרך כלל מחזוריים ותנודתיים; (3) התלותב הצלחהבפיתוח התהליכים והשירותים הטכנולוגיים החדשניים של החברה לטובת שימור הלקוחות וגיוס לקוחות חדשים; )4( התחרות ב שוק ייצור המוליכים למחצהבענףשב ו פועלת החברה 5; ) ( התנודתיותב תוצאותהכספיות, שעשויותלהשתנות מרבעון לרבעון, מקשותעל היכולת לחזות את הביצועים העתידיים של החברה; )6( החברה עשויה להידרש להשיג מימון ל ניצול הזדמנויות אסטרטגיות, מימון אשר עלול שלא להיות זמין עבורה במועד הנדרש או בתנאים כדאיים 7; ) ( הצורך לשמר את ה לקוחות העיקריים של החברה, ו/או לגייס לקוחות עיקריים חדשים (8; ) סיכונים הנוגעים לפעילות הבניה המבוצעתבסמוך ל מפעל החברה הממוקםבניופורט, ארה"ב ולחוזה השכירות של מפעל זה 9; ) ( מיתון, תנאישוקכלכלייםקשים , מחלה גלובאלי ת ו/או משבר אשראי ו/או קשיים בתעשיית המוליכים למחצה; )10( סיכונים הנובעים מ ביצוע רכישות עתידיות ותכניות להשגת יכולות ייצור תוספתיות והשגת מכירות בהיקף אשר לכל הפחות יכסה את עלויות הפעלתם, וכן הקושי של הטעמתן ו שילובן בעסקי החברה ואיתור לקוחות חדשים או הגדלת העסקים עם לקוחות קיימים לצורך השגת ניצולת ייצור גבוהה ב מתקני הייצור החדשים כאמור באופן רווחי; )11( הצורךש מפעליהחברה יפעלו בניצולתייצור גבוהה מספיק על מנת להשיג רמת הכנסות שתכסה אתכלהעלויותוההוצאותהתפעוליותבאופן שהחברהתוכל להגיע לרווח ותז יות רימימזומנים חיוביים; )12( חשיפהאפשרית של מפעלי הייצור והביצועיםשלהםל אסונותטבע, בעיקר רעידות אדמה ואסונות טבע אחרים; )13( החזרות אפשריות מלקוחות של מוצרי םשהם רכשו עקב שעור תנובה נמוך; )14( סיכונים הקשורים לפעילותה הבינלאומיתשל החברה)ובכלל זה שינוייםבשער יהחליפין, עלויות הציות לחקיקה ורגולציה במדינות שונות, סיכונים גיאופוליטיים, אסונות טבע וכיו"ב(; )15( סיכון ש קווי הייצור של החברה עלולים לעצור לתקופה קצרה או ארוכה עקב ניצולת ייצור גבוהה, היווצרות צווארי בקבוק בקווי הייצור, הפסקות חשמל, דליפת מים או כימיקלים וכדו', ולכן לקוחות החברה עלולים להעביר את ההזמנות שלהם ליצרנים אחרים; )16( קיומו של חוב ארוךטווח הכולל דרישות לעמידה ביחסים פיננסיים ומגבלות אחרות כתנאי סף למניעת עילת פרעוןמוקדם; )17( הקושי ל שלוטב תנודות בתזרים המזומנים של החברה; )18( ביקוש יתר לשירותי הייצור או /ו מוצרי החברה מעבר ליכולת החברה לספק , עלול לגרום לאובדן לקוחות, אשר יפנו למתחרה של החברה; )19( הצורך לשמר ולגייס כוח אדם מקצועי ומיומן; )20( סיכונים הנו בעים מהעובדה כי בתעשיית הייצור של המוליכים למחצה אין ליצרנים צבר הזמנות משמעותי מלקוחות, עובדה ה מקשה על יכולת חיזוי ה הכנסות והתוצאות ה עתידיות; )21( רוייצ מוצרי ם על בסיס ביקוש חזוי ולא על בסיס הזמנות שהתקבלו מלקוחות. במקרה כאמור, אם הביקוש החזוי יעלה על הביקוש בפועל, יתכן שיצטברו ב חברה דפיוע מלאי; (22) מחזורי המכירות הארוכים של החברה מתחילת ביצוע נסיון המכירה והשיווק, הכרוכים בהשקעת זמן והוצאותכספיותטרםקבלתהזמנה למוצרמהלקוח, -ואי הוודאות כי הזמנה אכן תתקבל ו/או האםהיקףההזמנותש יתקבל בסופו של דבר יהיה תואם לציפיות החברה; ) (23 קושי אפשרי לרכוש ציוד וחומרי גלם עלול ל מנ עו מהחברה לייצר את מוצריה בזמן ל לקוחות; )24( תנאי התקנות והתכניות המאושרות שהחברה עומדת בהם תחת התחייבויותיה לממשלת ישראל, התחייבויות על פיה ן קיבלה מענקי מחקר, פיתוח והשקעות הון ) ; 25 ( חשיפה לתנודות בשערי חליפין ובשיעור הריבית ) ; 26( תלות בקניין רוחני בבעלות או /ו ה בבעלות צדדים שלישיים; )27 ( סיכונים הנובעים מהליכים משפטיים אשר החברה היא מעת לעת צד להם, הדורשים, בין היתר, זמן הנהלה ומשאבים; )28( תנאי עמידה בתקנות איכות הסביבה; )29( חשיפת החברה לשימוש בחומרים דליקים בתהליכי הייצור שלה; )30( אי המשכיות מגמת השימוש הגובר בעולם ב מיקור חוץ של שירותי הייצור ) הן של חברות המייצרות מוליכים למחצה והן של חברות שאין להן Fab ); ( 31 )הצורך ליצור שיתופי פעולה מוצלחים עם ספקי שירותי תכנון, לצורך מתן מענה לצורכי התכנון של ה לקוחות; )32( היכולת לאתר קונים פוטנציאליים לרכישת ציוד עודף שאין בו צורך /ו או תועלת כלכלית עתידית ולנהל עימם משא ומתן שיוביל לתנאי מכירה מוצלחים; )33( אי עמידה בהוראות החקיקה והרגולציה הרלבנטיות במדינות בהן פועלת החברה, כמו גם אי עמידה בהוראות חקיקה ורגולציה שייכנסו לתוקף בעתיד; )34( חשיפה אפשרית לתביעות בגין אחריות מוצר או לתביעות אחרות, במידה וישנם פגמים בחלק מהמוצרים; )35( התאגדות עובדים שתגדיל את עלויות היצור ותגרום להפסקות ביצור, לשביתות והפרעות אחרות בתהליך היצור; )36( שינויי אקלים; )37( דרישות -ה Requirements Minerals Conflict .S.U בהתאם לחוק הדוד פרנק האמריקאי ) Act Frank-Dodd )והשלכותיה על יכולתה של החברה או יכולתם של ספקיה לרכוש חומרי גלם בעלות סבירה; )38( סיכונים שקשורים ל אבטח ה ת מידע, לרבות תקיפות סייבר והפרת הפרטיות;

גורמי סיכון הקשורים לניירות הערך של החברה לו הצעת ניירות ערך על- ידי החברה: 1) ( תנודתיות במחיר ניירות הערך הנסחרים של החברה והשלכותיה על יכולתה לגייס הון חדש 2; ) ( הגדרת החברה על פי כללי -ה SEC" כ מנפיק פרטי זר ) " Issuer Private Foreign), ולפיכך היא אינה כפופה לחוק י הפרוקסי בארה"ב ) rules proxy .S.U), אלא לחובות הדיווח -ה לפי 1934 of Act Exchange Securities , שהינן, במידה מסוימת, מקלות יותר וככללתדירותהדיווח לפיה ןנמוכה יותר לעומת תדירותהדיווחשלמנפיק מקומיבארה"ב )issuer .S.U 3 ) )( ;הגדרתהחברה בארה"ב כמנפיק פרטי זר, ולפיכך החברה רשאית לקיים חלק מהוראות הממשל התאגידי החלות במדינת התאגדותה במקום חלק מהוראות הנאסד"ק, דבר אשר עלול לספק הגנה פחותה מזו הניתנת למשקיעים על פי הכללים החלים על המנפיקים המקומיים בארה"ב; 4) ( חשיפה לעליה בעלויות הציות לכללי החקיקה והרגולציה במידה שתבוטל הגדרת החברה " מנפיק פרטי זר לפי כללי ה -SEC 5 ) "( ;החברה אינה צפויה לחלק דיבידנדים בעתיד הנראה לעין.

גורמיסיכון הקשורים לפעילות החברה בישראל ועלולים להשפיע על עסקיה: (1) חוסר היציבות הביטחוניוהפוליטי הקייםבישראל 2; ) ( הפטור הקיים לחברה מאז הקמתה ב1993- המאפשר לחברה להפעיל את מתקני הייצור הישראלים שלה במשך שבעה ימים בשבוע, ורישיון העסק של החברה 3; ) ( הקושישעלול להיווצר לאכוף בישראל פסק דין שניתן בארה"ב כנגדהחברה, נושאיהמשרה /ו או דירקטוריםבהו כןחלקמהמומחים המועסקים על ידה , או להגיש בישראל תביעות לפי דיני ניירות הערך האמריקאים /ו או לפתוח בהליך כנגד נושאי משרה ודירקטורים בחברה שאינםתושביארה"ב 4) ; ( הוראותהחוקהישראלי, העלולותל עכב, למנוע או להכשיל בדרך אחרת מיזוגאפשרי עםהחברה או רכישה שלה, אשר עשויים לעכב או למנוע שינוי שליטה, גם כאשר תנאי עסקה כאמור הינםל תועל תהחברה ובעלי מניותיה 5; ) ( הוראות החוקהישראלי, החלותעל הזכויות והחובותשל בעלי המניות בחברה, אשר נבדלות בהיבטיםמהותיים מסוימיםמהזכויותוהחובותשל בעלי מניות בתאגידים אמריקאים . לפירוט המלא בדבר כל גורמי הסיכון העשויים להשפיע על החברה, לרבות אלה המוזכרים לעיל, ראו סעיף 3.5 לתשקיף.

החברה ואגרות החוב )סדרה ז'( של החברה דורג ו בדירוג מנפיק על ידי מעלות S&P בע"מ בדירוג -ilAA/Stable .

מניותיה הרגילות של החברה רשומות למסחר בבורסה תחת הסימול "טאואר" וכן ב - Market Global Nasdaq"( Nasdaq )"תחת הסימול "TSEM", וזאת בהתאם למסמך רישום מכוח הוראות בדבר רישום כפול לפי פרק ה' 3 לחוק ניירות ערך והתקנות שהותקנו מכוחו.

תשקיף מדף זה נערך ודוחות המדף שיפורסמו על-פי התשקיף ייערכו, בהתאם לפטור מתקנות ניירות ערך )פרטי התשקיף וטיוטת תשקיף - מבנה וצורה(, תשכ"ט1969- )"תקנות פרטי תשקיף"(, שניתן לחברה על-ידי רשות ניירות ערך מכוח סעיף 35כט' לחוק ניירות ערך. לפרטים ראו סעיף 1.3 לתשקיף מדף זה. בין היתר, הותנה הפטור האמור בהתחייבותה של החברה בדבר החלת מודל הגילוי ההיברידי, ככל שיהיה רלוונטי, בהתאם למתכונת ולתנאים המצוינים בסעיף 1.3.7 לתשקיף מדף זה, ביחס לניירות הערך אשר יוצעו על-פי תשקיף מדף זה.

מהותיות בחברה ממועד תשקיף מדף זה וכן מידע משלים נוסף, אם וככל שהיה נדרש לפי ה - ¹⁹³³ of Act Securities States United-פי תשקיף מדף זה יכלול דוח הצעת מדף שתפרסם החברה על )במסגרת הדוח או על דרך ההפניה( מידע משלים לגבי התפתחויות כפי שתוקן מעת לעת )״Act Securities״( והכללים והתקנות של רשות ניירות ערך האמריקאית, אם הצעת ניירות ערך כאמור היתה מוגשת לרישום לפי ה - Act Securities במסמך רישום -3F Form, לרבות מידע כספי מעודכן בהתבסס על דרישות כללי רשות ניירות ערך האמריקאית בסעיף 8 של F20- Form, אם וככל הנדרש, וזאת בנוסף לפרטים הדרושים על-פי תקנות הצעת מדף )ובכללם פרטים אודות ניירות הערך המוצעים וכל פרט אחר הטעון תיאור על-פי אותן תקנות(. לפרטים ראו סעיף 1.3 לתשקיף מדף זה.

הדיווחים השוטפים של החברה הינם על-פי הדין בארה"ב ובשפה האנגלית, בהתאם לכללי הרישום הכפול הקבועים בפרק ה 3' לחוק ניירות ערך והתקנות שהותקנו מכוחו .

הצעת ניירות ערך במסגרת דוחות הצעת מדף על-פי תשקיף מדף זה תיעשה בישראל בלבד ולא תיעשה בארה"ב ו/או לאדם הנמצא בארה"ב ו/או ל-Persons .S.U כהגדרתם ב - S Regulation שהותקנה מכוח ה - Act Securities"( S Regulation)". על-פי דרישת הבורסה, הצעת ניירות ערך על-פי דוחות הצעת מדף על-פי תשקיף מדף זה תהיה מותנית בעמידת החברה בפטור מדרישות הרישום על- פי 1 Category של S Regulation ביחס לניירות הערך שיוצעו על-ידי החברה כאמור, על-פי חוות דעת עורך דין זר של החברה שתוגש לבורסה קודם למועד פרסומו של דוח הצעת המדף על-ידי החברה, לפיה אין מניעה לחברה להציע לציבור בישראל את ניירות הערך שיוצעו בדוח הצעת המדף, לרשום אותם למסחר בבורסה, לקיים בהם מסחר ולסולקם במסלקת הבורסה, הכל כמפורט בסעיף 1.2.4 לתשקיף. על אף האמור לעיל, לפי נסיבות העניין, תיתכן הצעת ניירות ערך במסגרת דוח הצעת מדף על-פי תשקיף מדף זה, אשר לא תהיה מוגבלת לתושבי ישראל בלבד, או תיתכן שתעמוד החברה בפטור מדרישות הרישום על פי - 2 Category של S Regulation, הכל כפי שיפורט בדוח הצעת המד .ף בחוות הדעת של עורך הדין האמריקאי של החברה שתוגש לבורסה קודם למועד פרסום דוח הצעת מדף על ידי החברה להנפקת כתבי אופציה או אגרות חוב להמרה על-פי תשקיף מדף זה, יצוין האם ישנן מגבלות בדיני ארה"ב החלים על החברה, על אישור בבית משפט בישראל הליך של הסדר או פשרה לפי סעיף 350 לחוק החברות, התשנ"ט1999- )"חוק החברות"(, לצורך שינוי תנאי ניירות הערך של החברה ולצורך מחיקת ניירות הערך מהרישום למסחר ביוזמת החברה. לעניין זה, יחולו ההוראות שבסעיף 1.2.4 -)א( )ג( לתשקיף המדף. יצוין כי רשות ניירות ערך התנתה את מתן ההיתר להנפקת כתבי אופציה או אגרות חוב להמרה על פי - תשקיף זה בכך שיתקיים האמור בס"ק 1.2.4)א( לתשקיף זה. ככל שחוות הדעת של עורך הדין תקבע כמפורט בס"ק 1.2.4)ג( לתשקיף זה, החברה תפנה לרשות ניירות ערך בטרם פרסום דוח הצעת מדף כאמור. לפרטים ראו סעיף 1.2.4 לתשקיף מדף זה .

כל רוכש של ניירות הערך שיוצעו על-פי דוח הצעת מדף שיפורסם על-פי תשקיף מדף זה 1) : ( ייחשב כמי שהצהיר כי הוא תושב ישראל, כי הוא זכאי לרכוש את ניירות הערך המוצעים בהתאם לפטור מדרישות הרישום לפי ה - Act Securities ;או )2( ייחשב כמי שהצהיר : )i ) כי אינו נמצא בארה" ב וכי אינו Person .S.U או לחילופין, כי הוא תושב ישראל וכי אינו Person .S.U) ;ii ) כי אינו רוכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור עבור או לטובת Person .S.U ו/או אדם הנמצא בארה"ב; )iii ) כי לא היה בארה"ב בעת שהגיש בקשה לרכוש ובעת שרכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור ) -; ו iv )כי אינו רוכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור עם כוונה לבצע "Distribution "של ניירות הערך האמורים בארה"ב )כמשמעו של מונח זה בדיני ניירות ערך האמריקאים(, הכל כפי שיפורט בדוח הצעת המדף. המפיצים עימם תתקשר החברה, ככל שתתקשר, להפצת ניירות הערך המוצעים, חברות קשורות שלהם וכל מי שפועל מטעמם, יצהירו כי יציעו את ניירות הערך המוצעים רק לתושבי ישראל ולא לכל אדם הנמצא בארה"ב או מי שהינו Person S.U, למעט בהתאם לפטור מדרישות רישום לפי ה - Act Securities או במסגרת עסקה שאיננה כפופה לדרישות הרישום האמורות, וכי לא ביצעו ולא יבצעו כל פעולה או פרסום בארה"ב בקשר עם קידום מכירתם של ניירות הערך המוצעים. על אף האמור לעיל, לפי נסיבות העניין, תיתכן הצעת ניירות ערך במסגרת דוח הצעת מדף על-פי תשקיף מדף זה, אשר לא תהיה מוגבלת לתושבי ישראל בלבד ולכן לא ייחשב כל רוכש של ניירות הערך שיוצעו על-פי דוח הצעת מדף כאמור כמי שהצהיר כי הוא אינו תושב ישראל, הכל כפי שיפורט בדוח הצעת המדף. תשקיף מדף זה ודוחות הצעת מדף על-פיו אינם מיועדים לפרסום ו/או הפצה ו/או חלוקה בארה"ב ו/או ל - Persons .S.U כהגדרתם - ב S Regulation, אף אדם אינו מוסמך לפעול למכירת ניירות הערך שיוצעו על-פי התשקיף ודוחות הצעת מדף שיפורסמו על-פיו בארה"ב. כל ניירות הערך שיוצעו על-פי דוחות הצעת המדף האמורים לא ירשמו על פי ה-Act Securities ולא יוצעו או יימכרו בארה"ב בהיעדר רישום או פטור רלוונטי מדרישות הרישום על פי ה-Act Securities. תשקיף מדף זה לא הוגש לרשות ניירות ערך בארה"ב ודוחות הצעת המדף שיפורסמו על-פיו לא יוגשו לרשות ניירות ערך בארה"ב. בכפוף לאמור להלן, ניירות הערך שיוצעו על-פי התשקיף ודוחות הצעת המדף על-פיו יכול ולא יירשמו בהתאם ל - Act Securities בארה"ב ואסור לבעלי ניירות הערך שיוצעו על-פי התשקיף ודוחות הצעת המדף על-פיו להציעם ו/או למכרם ו/או לשעבדם או להעבירם בדרך אחרת בארה"ב ו/או ל - Person .S.U, אלא אם יירשמו בהתאם ל S Regulation, על-פי מסמך רישום לפי ה - Act Securities או אם קיים פטור מדרישת הרישום בהתאם ל - Securities Act. בכפוף לאמור להלן, ואלא אם יצוין אחרת בדוח הצעת המדף, החברה אינה מתחייבת לרשום את ניירות הערך למסחר בארה"ב בהתאם ל - Act Securities או באופן אחר.

על תשקיף מדף זה ודוחות הצעת מדף שיפורסמו על-פיו ועל הצעת ניירות הערך ורכישתם על-פיהם וכל הנובע ו/או הקשור בתשקיף מדף זה ובדוחות הצעת המדף שיפורסמו על-פיו, יחולו דיני מדינת ישראל בלבד, ולא יחולו דינים אחרים כלשהם, וסמכות השיפוט הבלעדית בכל עניין הקשור לעניינים האמורים מוקנית אך ורק לבתי המשפט המוסמכים בישראל ולהם בלבד, והניצעים בהסכמתם לרכוש את ניירות הערך שיוצעו על-פי תשקיף מדף זה ודוחות הצעת המדף על-פיהם מקבלים על עצמם סמכות שיפוט בלעדית זו וברירת דין זו.

רכישת ניירות ערך שיוצעו על-פי דוח הצעת מדף שיפורסם על-פי תשקיף מדף זה תהיה כפופה להגבלות על מכירה חוזרת בהתאם לסעיף 904 -ל S Regulation, כפי שיפורט בדוחות הצעת מדף שיפורסמו על-פי תשקיף מדף זה.

החלטה לרכוש את ניירות הערך שיוצעו על-פי תשקיף מדף זה ועל-פי דוחות הצעת מדף שיפורסמו מכוחו, יש לקבל אך ורק בהסתמך על המידע הנכלל )לרבות בדרך של הפניה( בתשקיף מדף זה ובדוחות הצעת המדף על-פיו. החברה לא התירה לכל אדם או גוף אחר כלשהו למסור מידע שונה מזה המפורט בתשקיף מדף זה. תשקיף מדף זה ודוחות הצעת המדף על-פי ו אינם מהווים הצעה של ניירות ערך בכל מדינה אחרת למעט מדינת ישראל.

אם החברה תציע לראשונה בדוח הצעת מדף אגרות חוב או /ו ניירות ערך מסחריים, ואם אגרות החוב או /ו ניירות הערך המסחריים הנ"ל ידורגו, על-ידי חברה מדרגת )לפי שיקול דעתה הבלעדי של החברה(, אזי תפרסם החברה את דוח הדירוג או את העדכון לדוח הדירוג, לפי העניין, שלושה 3) ( ימים לפחות לפני פרסום דוח הצעת המדף וכן תצרף את דוח הדירוג לדוח הצעת המדף ואת הסכמת חברת הדירוג לצירופו כאמור .

בכפוף להוראות כל דין , ובכפוף להנחיות והוראות הבורסה, כפי שתהיינה בכל עת, מובהר כי החברה תהיה רשאית להנפיק את ניירות הערך המוצעים בכל הרכב ובכל כמות כפי שיקבעו על-ידה .

התחייבות החברה לפירעון אגרות החוב וניירות הערך המסחריים יכול ש תהיה מובטחת בבטוחות, כפי שיפורט בדוח הצעת המדף.

עותק מתשקיף זה עומד לעיון הציבור באתר האינטרנט של רשות ניירות ערך שכתובתו il.gov.isa.magna.www ובאתר הבורסה . maya.tase.co.il :שכתובתו

תאריך התשקיף: 13 במאי 2020

תוכן עניינים

-1א כללי -1א אישורים היתרים ו -3א רך ת ניירות ע פטור רשו -1ב המדף פי תשקיף הערך על ת ניירות פרטי הצע CHAPTER 3 -1ג -1ג General ג-1 Forward-Looking Statements -1ג Summary Information Regarding the Company ג-3 Selected Consolidated Financial Data ג-5 Risk Factors ג-26 Material Changes ג-26 Summary Terms of the Offer ג-27 Use of Proceeds ג-27 Capitalization and Indebtedness -27ג Description of Securities and History of Share Capital ג-28 Expenses of the Offering -28ג Incorporation of Certain Information by Reference ג-29 Where You Can Find More Information 29 ג- Indemnification of Directors and Officers 31 ג- Legal Matters 31 -ג Experts 31 -ג Undertakings -1ד ספים פרטים נו -1ד עורך דין חוות דעת -2ד ון ואי החשב כמה של ר מכתב הס -3ד ף סום תשקי היתר לפר שה למתן אגרת בק -3ד כים עיון במסמ -1ה חתימות	פרק 1:	מבוא	-1א
	1.1
	1.2
	1.3
	פרק 2:
	פרק 3:
	3.1
	3.2
	3.3

	3.4
	3.5
	3.6
	3.7
	3.8
	3.9
	3.10

	3.11
	3.12

	3.13
	3.14
	3.15
	3.16
	3.17
	פרק 4:
	6.1
	6.2
	6.3
	6.4
	פרק 5:

הצעת ניירות ערך לפי דוחות הצעת מדף שיפורסמו על-פי תשקיף מדף זה תיעשה בישראל בלבד ולא תיעשה בארה"ב ו/או ל - Persons .S.U כהגדרתם -ב S Regulation שהותקנה מכח ה - Act Securities . על פי - דרישת הבורסה, הצעת ניירות ערך על-פי דוחות הצעת מדף על-פי תשקיף מדף זה תהיה מותנית בעמידת החברה בפטור מדרישות הרישום על פי - 1 Category של S Regulation ביחס לניירות הערך שיוצעו על-ידי החברה כאמור, על-פי חוות דעת של עורך דין זר של החברה שתוגש לבורסה שתיערך קודם למועד פרסומו של דוח הצעת המדף על-ידי החברה, לפיה אין מניעה לחברה לפי הדין האמריקאי להציע לציבור בישראל את ניירות הערך שיוצעו בדוח הצעת המדף, לרשום אותם למסחר בבורסה, לקיים בהם מסחר ולסולקם במסלקת הבורסה. על אף האמור לעיל, לפי נסיבות העניין, תיתכן הצעת ניירות ערך במסגרת דוח הצעת מדף על פי - תשקיף מדף זה, אשר לא תהיה מוגבלת לתושבי ישראל בלבד, או תיתכן שתעמוד החברה בפטור מדרישות הרישום על פי - 2 Category של S Regulation, הכל כפי שיפורט בדוח הצעת המדף.

כל רוכש של ניירות הערך שיוצעו על-פי דוח הצעת מדף שיפורסם על-פי תשקיף מדף זה (1) : ייחשב כמי שהצהיר כי הוא תושב ישראל, כי הוא זכאי לרכוש את ניירות הערך המוצעים בהתאם לפטור מדרישות הרישום לפי ה - Act Securities ;או )2( ייחשב כמי שהצהיר ) : i )כי אינו נמצא בארה"ב וכי אינו Person .S.U, או לחילופין כי הוא תושב ישראל וכי אינו Person .S.U) ;ii )כי אינו רוכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור עבור או לטובת Person .S.U ו/או אדם הנמצא בארה"ב; )iii )כי לא היה בארה"ב בעת שהגיש בקשה לרכוש ובעת שרכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור ) -; ו iv ) כי אינו רוכש את ניירות הערך שיוצעו בדוח הצעת מדף כאמור עם כוונה לבצע "distribution " של ניירות הערך האמורים בארה"ב )כמשמעו של מונח זה בדיני ניירות ערך האמריקאים .( המפיצים עימם תתקשר החברה, ככל שתתקשר, להפצת ניירות הערך המוצעים, חברות קשורות שלהם וכל מי שפועל מטעמם, יצהירו כי יציעו את ניירות הערך המוצעים רק לתושבי ישראל ולא לכל אדם הנמצא בארה"ב או מי שהינו Person S.U, למעט בהתאם לפטור מדרישות רישום לפי ה - Act Securities או במסגרת עסקה שאיננה כפופה לדרישות הרישום האמורות, וכי לא ביצעו ולא יבצעו כל פעולה או פרסום בארה"ב בקשר עם קידום מכירתם של ניירות הערך המוצעים. על אף האמור לעיל, לפי נסיבות העניין, תיתכן הצעת ניירות ערך במסגרת דוח הצעת מדף על פי - תשקיף מדף זה, אשר לא תהיה מוגבלת לתושבי ישראל בלבד ולכן לא ייחשב כל רוכש של ניירות הערך שיוצעו על-פי דוח הצעת מדף כאמור כמי שהצהיר כי הוא אינו תושב ישראל, הכל כפי שיפורט בדוח הצעת המדף.

על תשקיף מדף זה ודוחות הצעת מדף שיפורסמו על-פיו ועל הצעת ניירות הערך ורכישתם על-פיהם וכל הנובע ו/או הקשור בתשקיף מדף זה ובדוחות הצעת המדף שיפורסמו על-פיו, יחולו דיני מדינת ישראל בלבד ולא יחולו דינים אחרים כלשהם, וסמכות השיפוט הבלעדית בכל עניין הקשור לעניינים האמורים מוקנית אך ורק לבתי המשפט המוסמכים בישראל ולהם בלבד , והניצעים בהסכמתם לרכוש את ניירות הערך שיוצעו על פי - תשקיף מדף זה ודוחות הצעת המדף על-פי ו מקבלים על עצמם סמכות שיפוט בלעדית זו וברירת דין זו.

תשקיף מדף זה ודוחות הצעת מדף על-פיו אינם מיועדים לפרסום ו/או הפצה ו/או חלוקה בארה"ב ו/או -ל

Persons .S.U כ הגדרתם -ב S Regulation ו , אף אדם אינו מוסמך לפעול למכירת ניירות הערך שיוצעו על- פי תשקיף מדף זה ודוחות הצעת מדף שיפורסמו על-פיו בארה"ב וניירות ערך שיוצעו על-פי דוחות הצעת המדף האמורים לא יוצעו או יימכרו בארה"ב ללא רישום או פטור מרישום בארה"ב. תשקיף מדף זה לא הוגש ואין כוונה להגישו בעתיד לרשות ניירות ערך בארה"ב ודוחות הצעת המדף שיפורסמו על פיו- לא יוגשו לרשות ניירות ערך בארה"ב. בכפוף לאמור להלן, ניירות הערך שיוצעו על-פי תשקיף מדף זה ודוחות הצעת המדף על-פיו יכול ולא יירשמו בהתאם ל - Act Securities בארה"ב ואסור לבעלי ניירות הערך שיוצעו על פי - תשקיף מדף זה ודוחות הצעת המדף על-פיו להציעם ו/או למוכרם ו/או לשעבדם או להעבירם בדרך אחרת בארה"ב ו/או ל - Persons .S.U, אלא אם יירשמו בהתאם ל -S Regulation, על-פי מסמך רישום לפי ה - Act Securities או אם קיים פטור מדרישת הרישום בהתאם ל - Act Securities. אלא אם יצוין אחרת בדוח הצעת המדף, החברה אינה מתחייבת לרשום את ניירות הערך למסחר בארה"ב בהתאם ל - Act Securities.

החלטה לרכוש את ניירות הערך שיוצעו על-פי תשקיף מדף זה ועל-פי דוחות הצעת מדף שיפורסמו מכוחו, יש לקבל אך ורק בהסתמך על המידע הנכלל )לרבות בדרך של הפניה( בתשקיף מדף זה ובדוחות הצעת המדף על- פיו. החברה לא התירה לכל אדם או גוף אחר כלשהו למסור מידע שונה מזה המפורט בתשקיף מדף זה. תשקיף מדף זה ודוחות הצעת המדף על-פיו אינם מהווים הצעה של ניירות ערך בכל מדינה אחרת למעט מדינת ישראל.

פרק - 1 מבוא

1.1 כללי

החברה התאגדה בישראל בשנת 1993 לפי פקודת החברות ]נוסח חדש[, התשמ"ג,1983- כחברה פרטית. ביום 10.11.1994 הפכה החברה לחברה ציבורית במועד רישום מניותיה של החברה למסחר ב - Nasdaq. ביום 4.1.2001 נרשמו מניות החברה למסחר גם בבורסה, כך שהחל ממועד זה רשומות מניותיה של החברה למסחר הן בבורסה והן ב- Nasdaq .

אלא אם כן נאמר מפורשות אחרת, כל הסכומים בתשקיף מדף זה נקובים בדולר ארה"ב.

1.2 היתרים ואישורים

1.2.1 החברה קיבלה את כל ההיתרים, האישורים והרישיונות הדרושים על פי דין להצעת ניירות הערך על-פי תשקיף זה, להנפקתם ו לפרסום תשקיף זה.
1.2.2 תשקיף זה הינו תשקיף מדף, כהגדרתו בסעיף 23א לחוק ניירות ערך והצעת ניירות ערך על-פיו תעשה על-פי דוח הצעת מדף אשר יוגש בהתאם לחוק ניירות ערך ותקנות הצעת מדף, ואשר בו יושלמו הפרטים המיוחדים לאותה הצעה.
1.2.3 אין בהיתרה של רשות ניירות ערך לפרסם את התשקיף משום אימות הפרטים המובאים בו או אישור מהימנותם או שלמותם, ואין בה משום הבעת דעה על טיבם של ניירות הערך המוצעים.
1.2.4 החברה פנתה אל הבורסה בבקשה למתן אישור עקרוני לרישום של ניירות ערך הכלולים בתשקיף מדף זה ואשר יוצעו, ככל שיוצעו, על-פי דוח הצעת מדף )"האישור העקרוני"(.

אין לראות באישור העקרוני האמור של הבורסה אישור לפרטים המובאים בתשקיף המדף או למהימנותם או לשלמותם ואין בו משום הבעת דעה על החברה או על טיבם של ניירות הערך המוצעים בתשקיף המדף או על המחיר בו יוצעו בדוח הצעת המדף, כהגדרתו לעיל .

מתן האישור העקרוני אינו מהווה אישור לרישום ניירות הערך המוצעים למסחר , והרישום למסחר יהיה כפוף לקבלת אישור לבקשה לרישום ניירות הערך למסחר על-פי דוח הצעת מדף אשר יוגש בהתאם לחוק ניירות ערך ותקנות הצעת מדף.

אין לראות במתן האישור העקרוני משום התחייבות למתן אישור לרישום ניירות הערך למסחר על-פי דוח הצעת מדף. על אישור בקשה לרישום ניירות ערך למסחר על-פי הצעת מדף יחולו הוראות תקנון הבורסה וההנחיות על-פיו, כפי שיהיו בתוקף בעת הגש ת הבקשה לרישום על- פי דוח הצעת המדף.

על-פי דרישת הבורסה, הצעת ניירות ערך על-פי דוחות הצעת מדף על-פי תשקיף מדף זה תהיה מותנית בעמידת החברה בפטור מדרישת הרישום על פי - 1 Category של S Regulation )שהותקנה מכוח ה - Act Securities )ביחס לניירות הערך שיוצעו ע -ל ידי החברה כאמור. החברה מתחייבת להגיש לבורסה חוות דעת עורך דין זר קודם למועד פרסומו של דוח הצעת מדף על-ידי החברה, לפיה אין מניעה לחברה, לפי ה - Act Securities להציע לציבור בישראל את ניירות הערך שיוצעו בדוח הצעת המדף, לרשום אותם למסחר בבורסה, לקיים בהם מסחר ולסולקם במסלקת הבורסה. על אף האמור לעיל, לפי נסיבות העניין, תתכן הצעת ניירות ערך במסגרת דוח הצעת מדף על-פי תשקיף מדף זה, אשר לא תהיה מוגבלת לתושבי ישראל בלבד, או תיתכן שתעמוד החברה בפטור מדרישות הרישום על פי - 2 Category של S Regulation, הכל כפי שיפורט בדוח הצעת המדף.

בחוות דעת עורך הדין הזר של החברה שתוגש לבורסה קודם למועד פרסומו של דוח הצעת מדף על-ידי החברה להנפקת כתבי אופציה או אגרות חוב הניתנות להמרה למניות על פי - תשקיף מדף זה, יצוין אם ישנה מניעה, על-פי דיני ארה"ב החלים על החברה, לאשר בבית משפט בישראל הליך של הסדר או פשרה לפי סעיף 350 לחוק החברות, בעניין שינוי תנאי ניירות הערך של החברה ולצורך מחיקת ניירות הערך מהרישום למסחר ביוזמת החברה. לעניין זה יחולו ההוראות שלהלן:

(א) אם נקבע בחוות הדעת האמורה, כי לא קיימת מגבלה על-פי דיני ארה״ב החלים על החברה, לאשר בבית משפט בישראל הליך של הסדר או פשרה לפי סעיף 350 לחוק החברות, תתחייב החברה, במועד הרישום למסחר לראשונה כאמור, כי אם תפעל לשינוי תנאי ניירות הערך או למחיקת ניירות הערך מהרישום למסחר ביוזמת החברה, היא תפנה לבית משפט בישראל לצורך אישור הפעולות כאמור על-פי סעיף 350 לחוק החברות.
(ב) צרפה החברה חוות דעת כאמור בס״ק )א( לעיל, אולם הודיעה לאחר הרישום למסחר, בדיווח מיידי, כי בכוונתה לאשר הסדר או פשרה לצורך שינוי תנאי ניירות הערך או לצורך מחיקת ניירות הערך מהרישום למסחר ביוזמת החברה, וכי בית משפט בישראל אינו מאשר לקיים בפניו דיון כאמור לפי סעיף 350 לחוק החברות, תחשב החברה לעניין זה כמי שפעלה על-פי סעיף 350 לחוק החברות, ובלבד שעשתה את כל הנדרש בהתאם לאמור בסעיף 350 לחוק החברות לאישור הסדר או פשרה, לרבות כינוס אסיפות נושים ו/או אסיפות בעלי ניירות הערך לסוגיהם, ובאסיפות כאמור אושרו הפעולות ברוב של משתתפים, כנדרש על-פי סעיף 350 לחוק החברות לאישור הסדר, למעט אישור ההסדר בבית משפט בישראל.
(ג) אם נקבע בחוות הדעת של עורך הדין שצרפה החברה כאמור לעיל, כי קיימת מגבלה על-פי דיני ארה״ב החלים על החברה, לאשר בבית משפט בישראל הליך של הסדר או פשרה לפי סעיף 350 לחוק החברות, תתחייב החברה במסמך על-פיו נרשמים לראשונה ניירות הערך הזרים למסחר, כי אם יהיה בכוונתה לאשר הסדר או פשרה לצורך שינוי תנאי ניירות הערך או לצורך מחיקת ניירות הערך מהרישום למסחר ביוזמת החברה, היא תעשה את כל הנדרש לשם אישור הפעולות כאמור על-פי סעיף 350 לחוק החברות,

לרבות כינוס אסיפות נושים ו/או אסיפות בעלי ניירות הערך לסוגיהם, ובאסיפות כאמור יאושרו הפעולות ברוב של משתתפים, כנדרש על-פי סעיף 350 לחוק החברות לאישור הסדר, למעט אישור ההסדר בבית משפט בישראל. פעלה החברה בדרך המפורטת לעיל, תחשב החברה, לעניין זה, כמי שפעלה על-פי סעיף 350 לחוק החברות.

יצוין, כי רשות ניירות ערך התנתה את מתן ההיתר להנפקת כתבי אופציה או אגרות חוב להמרה על-פי תשקיף זה בכך שיתקיים האמור בסעיף )א( לעיל. ככל שחוות הדעת של עורך הדין תקבע כמפורט בס"ק )ג( לעיל, החברה תפנה לרשות ניירות ערך בטרם פרסום דוח הצעת מדף כאמור.

1.3 פטור רשות ניירות ערך

1.3.1 סעיף 35כט' לפרק ה' 3 של חוק ניירות ערך קובע, בין היתר, כי רשות ניירות ערך רשאית לפטור מהוראות הנוגעות לפרטים בתשקיף מדף זה, מבנהו וצורתו, כולן או מקצתן, תאגיד שהתאגד בישראל המציע ניירות ערך לציבור אם ניירות הערך שלו רשומים למסחר בבורסה בחו"ל.
1.3.2 החברה קיבלה מאת רשות ניירות ערך פטור בהתאם לסעיף 35כט' לחוק ניירות ערך מתחולת תקנות פרטי תשקיף, ביחס לתשקיף מדף זה )"פטור הרשות"(. פטור הרשות הותנה במתן חוות דעת, לפיה במקרה בו החברה היתה פועלת לרישום בארה"ב של ניירות ערך מן הסוג שניתן היה להציע על-פי תשקיף מדף זה, על-פי כללי ה - Act Securities, היתה החברה רשאית לעשות זאת באמצעות מסמך רישום על טופס -3F" ( -3F Form ", )וכן בהתחייבות החברה כי ככל שיפורסם דוח הצעת מדף על פי תשקיף מדף זה, יעמוד דוח הצעת מדף כאמור בדרישות ה- Act Securities והכללים והתקנות הרלוונטיים של רשות ניירות ערך האמריקאית שהיו חלים אילו הוגש בארה"ב מסמך -3F Form לצורך רישום של ניירות ערך מהסוג שניתן להציע לציבור על פי תשקיף מדף זה, למעט כאמור בסעיף 1.3.5 להלן.
1.3.3 בנוסף, פטור הרשות הותנה בהתחייבותה של החברה כי כל עוד ניירות ערך של החברה, מלבד מניות, רשומים למסחר בבורסה או מוחזקים על-ידי הציבור בישראל, אם מניותיה של החברה תמחקנה מהרישום למסחר בבורסה הזרה, תגיש החברה דיווחים לפי פרק ו' לחוק ניירות ערך ותחדל תחולת הוראות פרק ה' 3 לחוק ניירות ערך על החברה.
1.3.4 כמו כן, הותנה פטור הרשות בהתחייבותה של החברה, כי ככל שתבקש להנפיק אגרות חוב רק בישראל, אשר יוצעו על פי - תשקיף מדף זה )"אגרות החוב החדשות"(, יחולו על החברה, החל ממועד הנפקת אגרות החוב החדשות, חובות הדיווח בהתאם למודל הגילוי ההיברידי, בהתאם למתכונת ולתנאים המצוינים בסעיף 1.3.7 להלן )"חובות הדיווח הנוספות " -" ו מודל הגילוי ההיברידי", בהתאמה(, וזאת כל עוד אגרות החוב החדשות יהיו במחזור. יובהר כי עצם חובת החברה לבחון את תחולת חובות הדיווח הנוספות, תחול רק ממועד הנפקת אגרות החוב החדשות בפועל.
1.3.5 בהתאם לפטור הרשות, החברה מאשרת כי היא ערכה תשקיף מדף זה, בהתבסס על דרישות

-ה Act Securities וכללי רשות ניירות ערך האמריקאית ל - -3F Form המיועד להצעה לציבור. בהתאם, תשקיף מדף זה )כולל המסמכים הנכללים בו על דרך הפניה(, עומד מכל הבחינות המהותיות בדרישות -ה Act Securities והכללים והתקנות הרלוונטיים של רשות ניירות ערך האמריקאית שהיו חלים אילו הוגש בארה"ב מסמך -3F Form לצורך רישום של ניירות ערך מהסוג שניתן להציע לציבור על-פי תשקיף מדף זה, למעט סדר הפרקים ולמעט התאמתם של הכריכה, הפרקים הכלולים בתשקיף מדף זה שהינם בשפה העברית )וכוללים או עשויים לכלול הכללה על דרך ההפניה של דיווחים בשפה האנגלית של החברה(, סעיף חוות דעת משפטית והסכמת רואה חשבון מבקר בפרק 4 לתשקיף מדף זה וכן פרק החתימות, שנערכו לפי הוראות תקנות פרטי תשקיף; וכן, למעט העובדה שב - -3F Form היו נכללים הצהרות ונספחים מסוימים אשר אינם נכללים בתשקיף מדף זה ואשר אינם רלוונטיים לענ יין הצעת ניירות ערך לציבור בישראל.

1.3.6 יודגש כי תשקיף מדף זה לא הוגש ואין כוונה להגישו בעתיד לרשות ניירות ערך האמריקאית והוא לא נבדק על-ידה.

1 1.3.7 הוראות מודל הגילוי ההיברידי

,² ובכללם החובה לבחון קיומם של "סימני אזהרה" כמפורט הוראות מודל הגילוי ההיברידי להלן, יחולו כאמור על החברה כל עוד אגרות החוב )סדרה ז'( של החברה ו/או אגרות חוב חדשות אשר יונפקו על-פי תשקיף זה בישראל, תהיינה במחזור .

החל ממועד ההנפקה תבחן החברה האם מתקיימים "סימני אזהרה", כפי שהם מוגדרים בסעיף 10)ב()14 ( לתקנות ניירות ערך )דוחות תקופתיים ומיידיים(, התש״ל1970- ״) תקנות , הדוחות"(, והחל ממועד התקיימות סימני אזהרה כאמור, וכל עוד סימני האזהרה מתקיימים³ יחולו על החברה חובות הדיווח הנוספות, כמפורט להלן:

1( תקנה 10)ב() (14 לתקנות הדוחות - גילוי אודות התקיימות סימני אזהרה בתאגיד וצירוף דוח תזרים מזומנים חזוי במקרים הנדרשים בתקנה; בחינת סימני האזהרה תיעשה על- פי הדוחות הכספיים המאוחדים של החברה )או על-פי פרסום נתוניה הכספיים

3 המועד בו סימני האזהרה אשר מבוססים על דוחות כספיים או על חוות דעתו או סקירתו של רואה החשבון המבקר, יחדלו להתקיים יהיה המועד הראשון בו יפורסמו דוחות כספיים, חוות דעת או סקירה בהתאמה ללא סימני אזהרה.

¹ בהתאם להחלטת מליאת הרשות מספר 1- 2013 בדבר שינוי מודל הטיפול ומתן פטור לחברות ברישום כפול שמנפיקות אג"ח רק בישראל ותיקון לה במסגרת החלטת מליאת הרשות מספר .6-2017

² הוראות מודל הגילוי ההיברידי לא תחולנה מקום בו החברה הנפיקה סדרת אגרות חוב שתיסחר בישראל בלבד, אם אגרות החוב שלה רשומות למסחר בבורסה הזרה, ובלבד שאגרות החוב שתונפקנה בישראל לא תהיינה נחותות באופן מהותי ביחס לאגרות החוב הזרות, ולא קיים הבדל משמעותי בין תקופת ההלוואה של האג"ח הישראליות לתקופת ההלוואה של האג"ח הזרות. יובהר , כי במקרה של שינוי ו/או תיקון להחלטת מליאת הרשות מספר 2013-1 : שינוי במודל הטיפול ומתן פטור לחברות ברישום כפול שמנפיקות אג״ח רק בישראל מיום 9.9.2013 ו/או לתקנות הדוחות, ביחס לדרישות הגילוי, הגילוי יבוצע ויותאם, בשינויים המחויבים, בהתאם לתיקון ו/או לשינוי בהחלטת הרשות ו/או לתקנות כאמור.

הרבעוניים( ;

2( תקנה 10)ב()1()ד( לתקנות הדוחות גילוי אודות הבחינה שנעשתה על-ידי הדירקטוריון לגבי מצב הנזילות של החברה, מקום שקיים אחד או יותר מסימני האזהרה, והנימוקים להחלטה;
3( תקנה 35א לתקנות הדוחות דיווחים מיידיים לטובת מחזיקי תעודות התחייבות שבמחזור;
- 4( תקנה 37)א()1( לתקנות הדוחות פרטים על חלוקת דיבידנד;
- 5( תקנה 37)א()5( לתקנות הדוחות פדיון מוקדם של אגרות חוב;
  - 6( תקנה 31ח לתקנות הדוחות פשרה או הסדר;
    - 7( תקנות 37 -כ 37כה גילוי אגב הסדרי חוב.

בנוסף, רשות ניירות ערך תוכל להפעיל את סמכויותיה הבאות ביחס לדרישות מודל הגילוי ההיברידי: )א( סמכויות הרשות לדרוש קבלת מידע, פרטים ומסמכים הקשורים למידע המתבקש במסגרת מודל הגילוי ההיברידי; )ב( סמכויות הרשות לעניין דרישה לפרסום דיווח מיידי ו/או דיווח מתקן ו/או דיווח משלים; )ג( סמכויות הרשות לעניין דרישה להוספת גילוי או מידע כאמור בדיווחי החברה, ככל שהדבר נחוץ לצורך הגנה על ציבור המשקיעים באגרות החוב בהתאם למודל ההיברידי .

1.3.8 דוח הצעת מדף שתפרסם החברה על-פי תשקיף מדף זה יכלול )במסגרת הדוח או על דרך ההפניה( מידע משלים בגין התפתחויות מהותיות בחברה ממועד תשקיף מדף זה וכן מידע משלים נוסף , והכל בהתבסס על דרישות ה - Act Securities וכללי רשות ניירות ערך האמריקאית ל - -3F Form, לרבות מידע כספי מעודכן בהתבסס על דרישות כללי רשות ניירות ערך האמריקאית בסעיף 8 של F20- Form, אם וככל שיידרש, וזאת בנוסף לפרטי ם הדרושים על-פי תקנות הצעת מדף )ובכללם השלמת פרטים אודות ניירות הערך המוצעים וכל פרט אחר הטעון תיאור על-פי אותן תקנות(.
1.3.9 הדיווחים השוטפים של החברה הינם בשפה האנגלית, על-פי הדין בארה"ב, בהתאם לכללי הרישום הכפול הקבועים בפרק ה' 3 לחוק ניירות ערך והתקנות שהותקנו מכוחו )כללי הרישום הכפול(.

תשקיף מדף זה כולל פרטים על דרך ההפניה. לפרטים ראו סעיף 3.12 " Certain of Incorporation ."Documents by Reference ## פרק - 2 פרטי הצעת ניירות הערך על פי תשקיף המדף

על פי תשקיף מדף זה, יכול שיוצעו לציבור מניות רגילות של החברה, אגרות חוב שאינן ניתנות להמרה, אגרות חוב הניתנות להמרה למניות רגילות של החברה, כתבי אופציה הניתנים למימוש למניות רגילות של החברה, כתבי אופציה הניתנים למימוש לאגרות חוב אשר אינן ניתנות להמרה, כתבי אופציה הניתנים למימוש לאגרות חוב הניתנות להמרה, וניירות ערך מסחריים )"ניירות הערך"(.

הצעת ניירות הערך על פי תשקיף מדף זה תיעשה בהתאם להוראות סעיף 23א)ו( לחוק ניירות ערך, באמצעות דוחות הצעת מדף בהם יושלמו כל הפרטים הנדרשים לפי פרק ג' לתקנות פרטי תשקיף ביחס לאותה הצעה, לרבות פרטי ותנאי ניירות הערך והרכב היחידות המוצעות, בהתאם להוראות כל דין, ובכלל זה בהתאם לתקנון ולהנחיות הבורסה ולעמדות סגל רשות ניירות ערך כפי שיהיו באותה העת .

CHAPTER 3

The securities are being offered solely in Israel to residents of Israel. The securities have not been registered with the United States Securities and Exchange Commission and are not being offered in the United States or to U.S. Persons.

3.1 General

In this prospectus, as of any particular date, "we," "us," "our," "Tower" and "the Company" and words of similar import, refer collectively to Tower Semiconductor Ltd., an Israeli company, and its then owned and/or consolidated subsidiaries. All references in this prospectus to "dollars", "US dollars", "USD" or "\$" are to United States dollars, all references to "JPY" is to the Japanese Yen and all references to "Shekels" or "NIS" are to New Israeli Shekels. We prepare our consolidated financial statements in U.S. dollars and in accordance with generally accepted accounting principles in the United States ("US GAAP").

3.2 Forward-Looking Statements

This prospectus and the documents incorporated by reference in this prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forwardlooking statements include, but are not limited to, statements regarding future expectations, projections of our results of operations or financial condition. Forward-looking statements involve estimates, assumptions, risks and uncertainties and are based on information currently available to our management. Therefore, our actual results and performance may differ materially from those expressed or implied in the forward-looking statements. Forwardlooking statements often, although not always, include words or phrases such as the following: "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "intends," "plans," "projection" and "outlook."

You should not unduly rely on forward-looking statements contained or incorporated by reference in this prospectus. Various factors could cause actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to, those identified in the risks discussed in Section 3.6 "Risk Factors" and in any of the documents we incorporate herein and in any shelf offering report. You should read and interpret any forward-looking statements together with these documents.

Any forward-looking statement speaks only as of the date on which that statement is made. We will not update any forward-looking statement to reflect events or circumstances that occur after the date on which such statement is made except as required by law.

3.3 Summary Information Regarding the Company

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION REGARDING THE COMPANY AND THE SECURITIES BEING OFFERED HEREBY, INCLUDING THE RISKS DISCUSSED UNDER THE HEADING "RISK FACTORS" SET FORTH IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.

YOU SHOULD ALSO READ CAREFULLY THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES THERETO AND OTHER INFORMATION THAT IS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, INCLUDING OUR ANNUAL REPORT ON FORM 20-F FOR THE YEAR ENDED DECEMBER 31, 2019.

Our History

Tower Semiconductor Ltd. was incorporated in 1993 under the laws of the State of Israel and is subject to the Israeli Companies Law of 1999 (the "Companies Law"). Our shares are listed on the NASDAQ Global Market under the ticker symbol "TSEM" and on the Tel Aviv Stock Exchange under the symbol "TSEM". Our executive offices are located in the Ramat Gavriel Industrial Park, Post Office Box 619, Midgal Haemek, 2310502 Israel, and our telephone number is 972-4-650-6611. Our agent for service of process in the United States is Tower Semiconductor USA, Inc. located at 2570 North First Street, Suite 480 San Jose, CA 95131.

Business Overview

We are a pure-play independent specialty foundry dedicated to the manufacture of semiconductors. Typically, pure-play foundries do not offer products of their own, but focus on producing integrated circuits (ICs), based on the design specifications of their customers. We manufacture semiconductors for our customers primarily based on third party designs. We currently offer the process manufacture geometries of 0.35, 0.50, 0.55, 0.60, 0.80-micron and above on 150-mm wafers and 0.35, 0.18. 0.16, 0.13 and 0.11-micron on 200-mm wafers and 65 nanometer and 45 nanometer on 300-mm wafers. We also provide design support and complementary technical services. ICs manufactured by us are incorporated into a wide range of products in diverse markets, including consumer electronics, personal computers, communications, automotive, industrial, aerospace and medical device products.

We are focused on establishing leading market share in high-growth specialized markets by providing our customers with high-value wafer foundry services. We manufacture standard analog complementary metal oxide semiconductor ("CMOS") process technology, which is a widely used method of producing ICs, and we specialize in specific technologies including CMOS image sensors, non-imaging sensors, wireless antenna switch Silicon-on-Insulator (SOI), mixed-signal, radio frequency CMOS (RFCMOS), bipolar CMOS (BiCMOS), and silicon-germanium BiCMOS (SiGe BiCMOS or SiGe), high voltage CMOS, radio frequency identification (RFID) technologies, MEMS, power management and Gallum Nitride (GaN) devices. To better serve our customers, we have developed and are continuously expanding our technology offerings in these fields. Through our experience and expertise gained during more than twenty five years of operation, we differentiate ourselves by creating a high level of value for our customers through innovative technological processes, design and engineering support, competitive manufacturing indices, and dedicated customer service.

Tower was founded in 1993, with the acquisition of National Semiconductor, Inc.'s 150-mm wafer fabrication facility located in Migdal Haemek, Israel, or Fab 1, and commenced operations as an independent foundry. Since then, we have significantly upgraded our Fab 1 facility, equipment, capacity and technological capabilities with process geometries ranging from 1.0-micron to 0.35-micron and enhanced our process technologies to include CMOS image sensors, embedded flash, advanced analog, radio frequency (RF) and mixed-signal technologies. Recently, we integrated advanced single Poly NVM into the Fab 1 process flows and developed a GaN technological platform (GaN on Si) suitable for fabrication of HEMT transistors, gas and UV sensors.

In 2003, we commenced production in Fab 2, a wafer fabrication facility we established in Migdal Haemek, Israel. Fab 2 supports geometries ranging from 0.35 to 0.13-micron, using advanced CMOS technology, including CMOS image sensors, embedded flash, advanced analog, RF (radio frequency), and specifically RF switches on SOI, power platforms and mixed-signal technologies.

In September 2008, we merged with Jazz Technologies, Inc ("Jazz"). Jazz focus on specialty process technologies for the manufacture of analog and mixed-signal semiconductor devices, and supports geometries ranging from 0.50 to 0.13-micron. Jazz's specialty process technologies include advanced analog, radio frequency, high voltage, bipolar, SOI and silicon germanium bipolar, complementary metal oxide ("SiGe") semiconductor processes. ICs manufactured by Jazz are incorporated into a wide range of products, including cellular phones, wireless local area networking devices, digital TVs, set-top boxes, gaming devices, switches, routers and broadband modems. Jazz operates Fab 3 located in Newport Beach, California, US.

In March 2014, we acquired from Panasonic 51% of a newly established company, TowerJazz Panasonic Semiconductor Co., Ltd. ("TPSCo"), which manufactures products for Panasonic and other third party customers, using three semiconductor factories located in Hokuriku Japan (Uozu E, Tonami CD and Arai E), which factories were established by Panasonic. Pursuant to the transaction, Panasonic transferred its semiconductor wafer manufacturing process and capacity tools (8 inch and 12 inch) at the three fabs to TPSCo, and entered into a five-year manufacturing agreement for the manufacture of products for Panasonic by TPSCo, which was extended in March 2019 for an additional three years, under amended terms, including a revised pricing structure.

In February 2016, we acquired Fab 9, a semiconductor fabrication facility located in San Antonio, Texas, US, from Maxim Integrated Products Inc. ("Maxim"). The assets and related business that we acquired from Maxim are held and conducted through one of our wholly-owned U.S. subsidiaries, TowerJazz Texas Inc. Fab 9 supports process geometries ranging from 0.80 to 0.18 for the manufacture of products using CMOS, power management and analog based technologies.

In March 2020, we launched a new brand identity, "Tower Semiconductor", for the Company and its worldwide subsidiaries. In connection with such rebranding, the company name of Jazz Semiconductor, Inc. was changed to Tower Semiconductor New Port Beach, Inc. and the company name of TowerJazz Texas Inc. was changed to Tower Semiconductor San Antonio, Inc. ("Tower SA").

3.4 Selected Consolidated Financial Data

You should carefully read the following selected Consolidated Financial Data in conjunction with "Item 5- Operating and Financial Review and Prospects" of our Annual Report on Form 20-F for the year ended December 31, 2019.

Our historical consolidated financial statements are prepared in accordance with US GAAP and are presented in US dollars. The selected historical audited consolidated financial information as of December 31, 2019 and 2018 and for each of the three years ended December 31, 2019, 2018 and 2017 has been derived from, and should be read in conjunction with, our audited consolidated financial statements, and notes thereto included in our Annual Report on Form 20-F filed with the SEC on April 30, 2020, which are incorporated by reference in this prospectus. The selected financial data as of December 31, 2017, 2016 and 2015 and for each of the years ended December 31, 2016 and 2015 has been derived from our audited consolidated financial statements for those years that are not included in this prospectus.

Our audited consolidated financial statements include Tower SA's results commencing February 1, 2016. Our audited consolidated balance sheets include Tower SA's balances since December 31, 2016.

Due to the acquisition of Tower SA, it may be difficult to perform year-over-year comparisons of our results of operations for the period subsequent to these transactions with prior periods. Our historical financial information may not be indicative of future performance.

	Year Ended December 31,
	2019		2018	2017	2016		2015
	(Dollars in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues			\$ 1,234,003 \$ 1,304,034 \$ 1,387,310 \$ 1,249,634 \$ 960,561
Cost of revenues	1,004,332		1,011,087 1,033,005		946,534		755,196
Gross profit	229,671		292,947	354,305	303,100		205,365
Research and development	75,579		73,053	67,664	63,134		61,669
Marketing, general and administrative	67,376		64,951	66,799	65,439		62,793
Nishiwaki Fab restructuring and impairment cost (income), net		--	--	--	(627 )		(991 )
Operating profit (loss)	86,716		154,943	219,842	175,154		81,894
Financing income (expense), net		12	(13,184 )	(15,447 )			(24,349 ) (123,109 )
Gain from acquisition, net		--	--	--	50,471		--
Other income (expense), net		4,293	(2,442 )	(2,627 )	9,322		(190 )
Profit (loss) before income tax	91,021		139,317	201,768	210,598		(41,405 )
Income tax benefit (expense), net	(2,948)		(5,938 )	99,888	(1,432 )		12,278
Net profit (loss)	88,073		133,379	301,656	209,166		(29,127 )
Net loss (income) attributable to non-controlling interest		1,975	2,200	(3,645 )	(5,242 )		(520 )
Net profit (loss) attributable to the Company	\$		90,048 \$ 135,579 \$ 298,011 \$ 203,924				\$ (29,647 )
Basic earnings (loss) per ordinary share	\$	0.85 \$	1.35 \$	3.08 \$	2.33	\$	(0.40 )
Diluted earnings per ordinary share	\$	0.84 \$	1.32 \$	2.90 \$	2.09

Other Financial Data:

Depreciation and amortization, including

amortization of financing expenses and accretion \$ 214,474 \$ 214,391 \$ 208,411 \$ 197,756 \$ 256,005

	As of December 31,
		2019	2018		2017		2016	2015
	(Dollars and share data in thousands)
Selected Balance Sheet Data:

Cash, cash equivalents and short
term interest-bearing deposits	\$	571,170 \$						505,170 \$ 445,961 \$ 389,377 \$ 205,575
Working capital	\$	835,425 \$						784,238 \$ 571,959 \$ 450,883 \$ 235,608
Total assets	\$	1,932,833 \$						1,789,977 \$ 1,673,639 \$ 1,379,884 \$ 965,368
Short-term bank debt and current maturities of loans, leases and
debentures	\$	65,932 \$			10,814 \$ 105,958 \$			48,084 \$ 33,259
Loan from banks, net of current
maturities	\$	101,365 \$	100,118 \$					87,533 \$ 133,163 \$ 210,538
Debentures, net of current
maturities	\$	94,552 \$						120,170 \$ 128,368 \$ 162,981 \$ 45,481
Capital leases, net of current
maturities	\$	39,207 \$	36,381 \$		12,822 \$			-- \$ --
Operating leases, net of current
maturities	\$	10,697 \$		-- \$		-- \$		-- \$ --
Shareholders' equity	\$	1,346,723 \$						1,236,205 \$ 1,029,706 \$ 682,614 \$ 385,586
Number of shares outstanding as of December 31 of any year		106,808	104,979		98,458		92,985	82,058

3.5 Risk Factors

An investment in our securities is speculative and involves a high degree of risk. Therefore, you should not invest in our securities unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as the other information contained in this prospectus and in the other reports that we file with the U.S. Securities and Exchange Commission (the "SEC") and the Israel Securities Authority (the "ISA"), and that we incorporate by reference into this prospectus before deciding to invest in our securities. This prospectus and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described below. The information in this prospectus is complete and accurate as of the date of this prospectus. However, the information may change thereafter. We do not undertake any obligation to update any forward-looking statements, whether as a result of new information, further events, or otherwise.

Risks Affecting Our Business

If we experience difficulty in achieving acceptable device yields, product performance and delivery times, as a result of manufacturing problems, our business may be adversely harmed.

The process technology for the manufacture of semiconductor wafers is highly complex, requires advanced and costly equipment and is constantly being modified in an effort to improve device yields, product performance and delivery times. Microscopic impurities such as dust and other contaminants, difficulties in the production process, defects in the key materials and tools used to manufacture wafers and other factors can cause wafers to be rejected or individual semiconductors on specific wafers to be non-functional. We may experience difficulty achieving acceptable device yields, product performance and product delivery times in the future as a result of manufacturing problems. Although we continuously enhance our manufacturing capabilities and efficiency, from time to time we have experienced production difficulties that have caused delivery delays and quality control problems. Manufacturing issues we may face include the following:

difficulties in upgrading or expanding existing facilities;
unexpected breakdowns in our manufacturing equipment and/or related facility systems;
unexpected events, such as an electricity outage, affecting the manufacturing process;
difficulties in changing or upgrading our process technologies;
raw material shortages or impurities;
delays in delivery or shortages of spare parts; and
difficulties in maintenance and upgrade of our equipment.

Should such problems occur to a material degree, we may suffer delays in delivery, loss of income, loss of reputation and/or a loss of customers, any of which may adversely impact our business, revenues, financial results and financial condition.

Demand for our foundry services is dependent on the demand in our customers' end markets, which are typically cyclical and volatile. A material decrease in demand for products that

contain semiconductors may decrease the demand for our services and products, and a decrease in the selling prices of our customers' products may significantly affect our business, financial results and financial position.

Our customers generally use the semiconductors produced in our fabrication facilities ("fabs") in a wide variety of applications. We derive a significant percentage of our operating revenues from customers who use our manufacturing services to make semiconductors for communication devices, consumer electronics, PCs and other electronic devices. Any significant decrease in the demand for these electronic devices or products may decrease the demand for our services and products. In addition, if the average selling prices of communication devices, consumer electronics, PCs or other electronic devices decline significantly, we may be pressured to reduce our selling prices, which may reduce our revenues and margins significantly. As demonstrated in the past by downturns in demand for high technology products, market conditions can change rapidly, without warning or advance notice. In such instances, our customers may experience inventory buildup and/or difficulties in selling their products and, in turn, may reduce or cancel orders for wafers from us, which may harm our business and profitability. The timing, severity and recovery of these downturns cannot be predicted.

In order for demand for our wafer fabrication services to increase, the markets for the end products utilizing the integrated circuits that we manufacture must develop and expand. For example, the success of our imaging process technologies will depend, in part, on the growth of markets for certain image sensor product applications. Because our services may be used in many new applications, it is difficult to forecast demand. If demand is lower than expected, we may have excess capacity and our revenue may not be sufficient to cover all our costs and serve all our debt, which may adversely affect our financial results and financial position.

If we do not maintain and develop our technology processes and services, we may lose customers and may be unable to attract new ones.

The semiconductor market is characterized by rapid change, including the following:

rapid technological developments;
evolving industry standards;
changes in customer and product end user requirements;
frequent new product introductions and enhancements; and
short product life cycles with declining prices as products mature.

Our ability to maintain our current customer base and attract new customers is dependent in part on our ability to continuously develop and introduce to production advanced specialized manufacturing process technologies and purchase the appropriate equipment. If we are unable to successfully develop and introduce these processes to production in a timely manner or at all, or if we are unable to purchase the appropriate equipment required for such processes, we may be unable to maintain our current customer base and may be unable to attract new customers.

The semiconductor foundry business is highly competitive and our competitors may have competitive advantages over us; our financial results may be adversely affected if we do not successfully compete in the industry.

The semiconductor foundry industry is highly competitive. We compete most directly

in the specialty segments with certain independent dedicated foundries. We also compete with the pure play advanced technology node driven foundry service providers as they each have some capacity for specialty process technologies, and with integrated device manufacturers that allocate a portion of their manufacturing capacity to foundry operations. As our competitors continue to expand their manufacturing capacity, there could be an increase in specialty semiconductor capacity. As specialty capacity increases, there may be more competition and pricing pressure on our services, which may result in underutilization of our capacity, decrease of our profit margins, reduced earnings or increased losses.

In addition, some semiconductor companies have advanced their complementary metal oxide semiconductor ("CMOS") designs to smaller than 14 nanometer process geometries. These smaller process geometries may provide customers with performance and integration features that may be comparable to, or exceed, features offered by our specialty process technologies. The smaller process geometries may also be more cost-effective at higher production volumes for certain applications, such as when a large amount of digital content is required in a mixed-signal semiconductor and less analog content is then required. Our specialty processes will therefore compete with these more advanced CMOS processes and some of our potential and existing customers could elect to design these advanced CMOS processes into their next generation products. We are not currently capable, and do not currently plan to become capable, of providing CMOS processes at these smaller process geometries. If our potential or existing customers choose to design their products in a manner whereby the percentage of digital content in specialty designs increases significantly and requires these advanced CMOS processes, our business may be negatively impacted.

In addition, many of our competitors may have one or more of the following competitive advantages over us:

greater manufacturing capacity and/or availability of same;
a more diverse and established customer base;
greater financial, sales, marketing, distribution and other resources;
governmental funding or support;
a better cost structure; and/or
better operational performance, including cycle time and yields.

If we do not compete successfully, our business and financial results may be adversely affected.

Our financial results may fluctuate from quarter to quarter, making it difficult to predict our future performance, which may negatively affect our financial position and financial results.

Our revenues, expenses and operating results have varied significantly in the past and may fluctuate significantly from quarter to quarter in the future due to a number of factors, some of which are beyond our control. These factors include, among others:

The cyclical nature of the semiconductor industry and the volatility of the markets served by our customers;
Changes in the economic conditions of geographical regions where our customers and their markets are located;
Our ability to conclude and materialize business development and acquisition transactions for capacity expansion;
Inventory and supply chain management of our customers;
The loss of a key customer, not attracting new designs from key customers, postponement of an order from a key customer or the rescheduling or cancellation of large orders;
The occurrence of accounts receivable write-offs, failure of a key customer to pay accounts receivable in a timely manner, the financial condition of certain of our customers and the regulatory or other payment difficulties that may be imposed in a region in which customers reside;
The occurrence of an unexpected event, such as environmental events, a global disease, industrial accidents such as fire or explosions, electricity outage, affecting the manufacturing process and our ability to recover the lost or damaged products and provide quality and timely production to our customers without charging them significant additional costs;
Completing capacity expansions and recruitment of personnel in a timely manner to address product demands by our customers;
Mergers and acquisitions in the semiconductor industry and their effect on our market share;
Our ability to satisfy our customers' demand for quality and timely production;
The timing and volume of orders relative to our available production capacity;
Our ability to obtain raw materials and equipment on a timely and cost-effective basis;
Price erosion in the industry and our ability to negotiate prices with our current and new customers;
Our susceptibility to intellectual property rights' disputes;
Our dependency on export licenses and other permits required for our operations and the sale of our products;
Our ability to maintain existing partners and to enter into new partnerships and technology and supply alliances on mutually beneficial terms;
Interest, price index and currency rate fluctuations that were not hedged;
Technological changes and short product life cycles;
Timing for the design and qualification of new products; and
Changes in accounting rules affecting our results.

Due to the factors noted above and other risks discussed in this section, many of which are beyond our control, it is difficult to predict our future performance and any fluctuations in future performance from expectations may ultimately negatively affect our operating results and financial position.

We may be required to obtain financing for strategic opportunities, which financing may not

be available for us in a timely manner or on favorable terms, and which may dilute the holdings of our shareholders and/or require us to incur additional debt.

In order to invest in strategic opportunities in support of our acquisition and capacity growth plans and/or business development activities, we may be required to obtain funds from financing sources, including through debt vehicles and/or re-financing, sale of new securities or other financing alternatives. There is no assurance that we will be able to obtain sufficient funding, if at all, from these financing sources or other sources in a timely manner (or on commercially reasonable terms) in order to allow us to fund our growth plans and/or business development activities, which may adversely affect our financial position and operations, may dilute the holdings of our shareholders and/or require us to incur additional debt.

If we do not maintain our current key customers, and/or do not attract new key customers, our business and profitability may be adversely affected.

Loss or cancellation of business from, or decreases in the sales volume or sales prices to, our significant customers, or our failure to replace lost business with new customers, may seriously harm our financial results, revenues and business. We have relationships with several customers that represent a material portion of our revenues. In 2019, 27% of our revenues were generated from one customer (PSCS), as detailed below, and five additional customers each generated between 5% to 9% of our revenues. The loss or reduction in volume or sales price to any one of these customers, whether due to business negotiation, their insolvency or their unwillingness or inability to perform their obligations under their respective relationships with us, or our inability to renew our engagements with them on commercially reasonable terms, produce their new products, fulfill their demand, or, alternatively, attract new customers to replace such lost business, may materially negatively impact our overall business, revenues and profitability.

PSCS (Panasonic Semiconductor Solutions), a wholly-owned subsidiary of Panasonic Corporation, is the largest customer of TPSCo and Tower on a consolidated basis. TPSCo engaged PSCS under a manufacturing agreement in March 2014 for a five-year period, which was renewed in March 2019 for an additional three years. Due to the reduced selling price per product and services under the renewed March 2019 agreement, revenue from PSCS decreased by approximately \$70 million in the nine-month period ended December 31, 2019. We are making efforts to compensate for such reduction with additional manufacturing volume demand from other customers into TPSCo fabs; however, if we are unsuccessful in such efforts, our consolidated revenue, financial position and results may be adversely effected.

In November 2019, Panasonic announced the sale of its shares in PSCS to Nuvoton Technology Corp. (a Taiwan based semiconductor company, majority owned by Winbond Electronics Corporation), in a transaction that is planned to close in June 2020. We cannot assure you that such transaction will not have an impact on our financial results, cash position and profitability.

Risks relating to construction activities adjacent to Fab 3 and our Fab 3 lease could harm our operations and financial results.

Our Fab 3 fabrication facility and its offices are leased under a contract in effect until 2022, which we can extend until 2027 through the exercise of an option at our sole discretion. A few years ago, the landlord began a construction project adjacent to the fabrication facility, which may adversely impact Fab 3 operations, including temporary reductions or interruptions in the supply of utilities to the property, and a portion or all of the fabrication facility may need to be idled temporarily during development. If construction activities limit or interrupt the supply of water, gas or electricity to Fab 3 or cause significant vibrations or other disruptions, it could limit or delay Fab 3's production, which may adversely affect our business and operating results. In addition, an unplanned power outage caused by construction activities, even of very limited duration, may result in a loss of wafers in production, deterioration in Fab 3's yield and on-schedule delivery, and may require substantial downtime to reset equipment before resuming production. These may cause customer dissatisfaction and cause customers to transfer their product orders to other fabs, which may adversely affect our financial results. In addition, the landlord has claimed that noise abatement actions that have been implemented according to obligations under the lease are not adequate under the terms of the lease. While we do not agree with, and are disputing, these claims, any adverse change to the current lease agreement may adversely impact our business and future financial results.

A global recession and/or, unfavorable economic conditions, global disease, credit crisis and/or weakness in the semiconductor industry may adversely affect our results and our ability to fulfill our debt obligations and other liabilities.

The effects of a global recession, unfavorable economic conditions, and/or global disease, such as the recent coronavirus pandemic, credit crisis and/or a weakness in the semiconductor industry may include global decreased demand, downward price pressure, excess inventory, shortage of supplies and materials for manufacturing and unutilized capacity worldwide, any of which may negatively impact consumer and customer demand for our products and the end products of our customers. Such an event may adversely affect our ability to attract new customers and new business to our fabs as well as maintain current customers. Such an event may also adversely affect our ability to increase the utilization rates in our manufacturing facilities and maintain them at a high level that would suffice to cover our substantial fixed costs, maintain commercial relationships with our customers, suppliers, and creditors, including our lenders, and continue our capacity growth. In addition, such an event may negatively impact our ability to improve our future financial results and position, including our ability to raise funds in the capital markets, fulfill our debt obligations and other liabilities, refinance our debt and other liabilities and/or pay them in a timely manner. There is no assurance that such an event will not occur.

The recent coronavirus outbreak, which was declared a global pandemic by the World Health Organization during March 2020, and its continued progress, may adversely affect our revenue, business and financial results. We may face (i) a shortage of supply of raw materials, products and services due to local restrictions and possible isolation periods imposed by the governments of vendors, or due to no or limited international courier delivery services, which may adversely affect our ability to secure our supply chain and continue operating and manufacturing in one or more of our fabrication facilities; (ii) potential reduced attendance of employees and service providers to our facilities and offices due to local restrictions and isolation periods imposed on them by the local government, which may adversely affect our ability to continue operating and manufacturing at one or more of our facilities; and (iii) potential reductions in customer orders or pricing due to any related or resulting global economic downturn, which may adversely affect our business and financial results.

Our reliance on acquisitions and/or gaining additional capacity for growth involve risks that may adversely affect our future revenues, business and operating results.

We may decide to expand our manufacturing footprint and business by attracting new customers that will utilize our expanded capacity through acquisitions, as we have done in the past, and and/or through capturing and obtaining access to additional manufacturing capacities and/or facilities, with or without third-party collaboration. Our success at such expansion is dependent, in part, on finding suitable partners and targets for acquisitions, successfully financing and consummating such expansion plans, integrating the acquired facilities into our business and loading the facilities in an amount that may at least cover their operating and other costs. We cannot assure you that we will be successful in expanding our business, finding and successfully executing such acquisitions or capacity expansions or that they will achieve the expected synergies. Further, we cannot assure you that we will increase our market presence and attract new customers and business in order to operate any such acquired facilities profitably.

This strategy involves many risks, each of which may negatively affect our profitability and financial position, including the following risks:

We may fail to identify acquisitions and/or opportunities to capture additional capacity required for our customers that would enable us to execute our business strategy;
Other foundries may bid against us to acquire potential targets. This competition may result in decreased availability of, or increased prices for, suitable acquisition candidates;
We may not be able to obtain the necessary regulatory approvals, or we may not be able to obtain the necessary approvals from our lenders, and as a result, or for other reasons, we may fail to consummate certain acquisitions;
Potential acquisitions and execution of an expansion plan may require the dedication of substantial management effort, time and resources which may divert management from our existing business operations or other strategic opportunities;
We may fail to integrate acquisitions successfully and materialize our expansion plan in accordance with our business strategy, achieve anticipated benefits depending in part on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, expected synergies, attract sufficient business to newly acquired facilities in a timely manner or realize the anticipated growth opportunities from integrating an acquired business into our existing business;
We may not be able to retain experienced management and skilled employees from the businesses we acquire and, if we cannot retain such personnel, we may not be able to attract new skilled employees and experienced management to replace them;
We may purchase a company with excessive unknown contingent liabilities;
We may not be able to obtain sufficient financing which could limit our ability to engage in certain acquisitions and strategic engagements; and
The amount or terms of financing actually required before and after acquisition may vary from our expectations, resulting in a need for more funding that may not be available to us in order to finance the operations of the target acquisition and to acquire additional machinery and equipment and adjust the target's manufacturing line to address our customer demand.

Our financial results may be adversely affected if we are unable to operate our facilities at satisfactory utilization rates necessary to generate and maintain positive and sustainable gross, operating and net profits.

As is common in our industry, a large portion of our total costs is comprised of fixed costs, associated mainly with our manufacturing facilities, while our variable costs are relatively small. Therefore, while during periods when our facilities manufacture at high utilization rates we are able to cover our costs, at times when the utilization rate is low, the reduced revenues may not cover all of the costs since a large portion are fixed costs which remain constant, irrespective of the number of wafers manufactured. In addition, our depreciation costs and capital expenditure investments, as common in our industry, are relatively high. Our financial results, including our gross, operating and net profits, may be adversely impacted if customer demand for our products is not sufficient to enable us to operate our facilities consistently at satisfactory utilization rates necessary to generate and maintain revenue levels that would cover all of our costs.

Our fabs' production performance metrics and business could be significantly harmed by natural disasters, particularly earthquakes.

Fab 1 and Fab 2 are located in an area near the Syrian-African rift valley, which is known to have seismic activity. Fab 3 is located in southern California, a region known for seismic activity. TPSCo's fabs are located in Japan, which is generally susceptible to seismic activity. Due to the complex and delicate nature of our manufacturing processes, our facilities are particularly sensitive to the effects of vibrations associated with even minor earthquakes. Our business operations depend on our ability to maintain and protect our facilities, computer systems and personnel. We cannot be certain that precautions that any of our fabs have taken to seismically upgrade the fabs will be adequate to protect our facilities in the event of an earthquake. Earthquakes may lead to fire in the fabs or other material damage, and any resulting damage could seriously disrupt production and result in reduced revenues. Although we maintain insurance policies to mitigate any potential losses that may be caused by earthquakes and other natural disasters, including business interruption insurance, our insurance coverage may not compensate us fully for all of the losses we may incur. If any of our fabs were to be damaged or cease operations, even for a limited duration, as a result thereof, and if our insurance proves to be inadequate, our manufacturing capacity and revenues may be adversely affected, thereby exposing us to third party claims. A power outage, even of very limited duration, caused by an earthquake or other natural disaster may result in a loss of wafers in production, deterioration of our fab yield and substantial downtime to reset equipment before resuming production, thereby potentially causing a material adverse effect on our business, revenue and profits.

Possible product returns could harm our business.

Products manufactured by us may be returned within specified periods if they are defective or otherwise fail to meet customers' prior agreed upon specifications. Future product returns may have an adverse effect on our business and financial results.

We are subject to risks related to our international operations.

We generate revenues from customers located in the US, Europe and Asia-Pacific. Because of our international operations, we are vulnerable to the following risks:

JPY fluctuations against the USD --see the risk factor below entitled: "Our exposure to currency exchange and interest rate fluctuations may impact our costs and financial results";
the burden and cost of compliance with foreign government regulation, as well as compliance with a variety of foreign laws;
impact of potential new legislation under the Trump administration;
general geopolitical risks, such as political and economic instability, international terrorism, potential hostilities and changes in diplomatic and trade relationships;
natural disasters and global diseases, affecting the countries in which we manufacture and/or conduct our business;
imposition of regulatory requirements, tariffs, import and export restrictions and other trade barriers and restrictions, including the timing and availability of export licenses and permits;
adverse foreign and international tax rules and regulations, such as withholding taxes deducted from amounts due to us and not refunded to us by the tax authorities since we are not entitled to foreign tax credit in Israel;
weak protection of our intellectual property rights in certain foreign countries;
delays in product shipments due to local customs restrictions;
laws and business practices favoring local companies;
difficulties in collecting accounts receivable; and
difficulties and costs of staffing and managing foreign operations.

In addition, Israel, the United States, Japan and other foreign countries may implement quotas, duties, taxes or other charges or restrictions upon the import or export of our products, leading to a reduction in sales and profitability in such countries. The geographical distance between Israel, the United States, Japan and the rest of Asia and Europe also creates certain logistical and communication challenges. We cannot assure you that we will be able to sufficiently mitigate all the risks related to our international operations.

The production lines of our fabs may stop for certain periods of time due to bottlenecks, power outages, water leaks, chemical leaks or other issues, which may adversely affect our cycle time, yield, and delivery schedules, potentially causing an immediate loss of revenue and profitability. In addition, affected customers may elect to transfer their product orders to other fabs, which could materially adversely affect our business and financial results.

There are many events that may occur which may adversely affect the manufacturing process in our manufacturing facilities. From time to time, we experience high utilization rates in certain of our manufacturing lines and/or areas, which cause bottlenecks in the lines and/or specific areas and/or specific machines, power outages, water leaks, chemical leaks or other issues that may adversely affect our cycle time, yield and delivery schedules, which may cause an immediate loss of revenue and profitability in a particular period. In addition, affected customers may elect to transfer their product orders to other fabs, which could materially adversely affect our business, revenue, profitability and financial position over the longer term. While we try to mitigate any potential damage caused by such events and have insurance coverage, which may compensate us partially or fully against certain types of damages, we cannot ensure that such events will not have a negative effect on the Company,

Our financial position and operations may be affected as a result of our long-term debt.

As of December 31, 2019, we had approximately \$290 million of consolidated principal amount of long-term debt outstanding, comprised as follows: (1) Tower had approximately \$135 million outstanding principal amount of Series G debentures, payable in seven semi-annual consecutive equal installments from March 2020 to March 2023; (2) TPSCo had loans of approximately \$101 million principal amount (the "JP Loan"), carrying a fixed interest rate of approximately 2% per annum, with principal scheduled to be repaid in nine semiannual payments between the first quarter of 2021 and 2025; and (3) Tower and its affiliates had capital lease agreements outstanding in the amount of approximately \$54 million from JA Mitsui Leasing, repayable between 2020 and 2024. Carrying such an amount of longterm debt may have significant negative consequences on our business, including:

limiting our ability to fulfill our debt obligations and other liabilities;
requiring the use of a substantial portion of our cash to service our indebtedness rather than investing our cash to fund our strategic growth opportunities and plans,

working capital and capital expenditures;

increasing our vulnerability to adverse economic and industry conditions;
limiting our ability to obtain additional financing;
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete;
placing us at a competitive disadvantage with respect to less leveraged competitors and competitors that have better access to capital resources;
volatility in our non-cash financing expenses due to increases in the fair value of our debt obligations;
fluctuations of the payable amounts in USD of the JP Loan or other expenses which are denominated in JPY; and
potential enforcement by the lenders of their liens against our respective assets, as applicable, if an event of default occurs.

In order to service our debt, the applicable interest it carries and other liabilities and obligations and/or improve its terms and conditions and/or to invest in strategic opportunities for growth and/or business development activities, in addition to our cash on hand and expected cash flow generation from operating activities, we may decide to obtain funds from additional sources including debt vehicles and/or re-financing, sale of new securities, sale of intellectual property and/or intellectual property licensing, as well as additional financing alternatives. However, there is no assurance that we will be able to obtain sufficient funding, if at all, from the financing sources detailed above or other sources in a timely manner (or on commercially reasonable terms) in order to allow us to fund our growth plans and/or cover, in a timely manner, all our costs, capital expenditure investments and all of our scheduled debt detailed above, liabilities and obligations, which may adversely affect our financial position and operations.

If we are unable to manage fluctuations in cash flow, our business and financial position may be adversely affected.

Our working capital requirements and cash flows are subject to quarterly and yearly fluctuations, depending on a number of factors. If we are unable to manage fluctuations in cash flow, our business, operating results and financial condition may be materially adversely affected. Factors which may lead us to suffer cash flow fluctuations include:

fluctuations in the level of revenues from our operating activities;
fluctuations in the collection of receivables;
timing and size of payables;
the timing and size of capital expenditures;
the net impact of JPY/ USD fluctuations on our JPY income and JPY expenses;
the repayment schedules of our debt service obligations;
our ability to fulfill our obligations and meet performance milestones under our agreements; and

● fluctuations in the USD to NIS exchange rate.

Over-demand for our foundry services and/or products may result in a loss of customers and revenues, which may adversely affect our profitability and business.

In periods during which demand for our foundry services exceeds our capacity and manufacturing capabilities, we may be (i) unable to fulfill customer demand in whole or in part, in a timely manner or at all; (ii) unable to assure production of customers' next generation products; and/or (iii) unable to provide additional capacity from any of our geographic facilities through transfer of process technologies, successful implementation and timely qualification. As a result, we could lose one or more of our current and/or potential customers, which may adversely affect our revenues, profitability and business.

Our business could suffer if we are unable to retain and recruit qualified personnel.

We depend on the continued services of our senior executive officers, senior managers and skilled technical and other personnel. Our business could suffer if we lose the services of some of these personnel due to resignation, medical absence, illness or other reasons, and cannot find and integrate adequate replacement personnel into our senior management, business and operations in a timely manner. We seek to recruit highly qualified personnel and there is intense competition for the services of these personnel in the semiconductor industry. Competition for personnel may increase significantly in the future as new fabless semiconductor companies as well as new semiconductor manufacturing facilities are established. Our ability to retain existing personnel and attract new personnel is in part dependent on the compensation packages we offer. As demand for qualified personnel increases, we may be forced to increase the compensation levels, including adjustment of the cash, equity and other components of compensation we offer our personnel.

The lack of a significant backlog resulting from our customers not placing purchase orders far in advance makes it difficult for us to forecast our revenues and margins in future periods and may cause actual revenue and results to fall short of expectations.

Our customers generally do not place purchase orders far in advance, partly due to the cyclical nature of the semiconductor industry. As a result, we do not typically operate with any significant backlog, which makes it difficult for us to forecast our revenues in future periods. Moreover, since our expense levels are based in part on our expectations of future revenues, we may be unable to adjust costs in a timely manner to compensate for revenue shortfalls caused by cancellations, rescheduling of orders or lower actual orders than quantities forecasted. Rescheduling may relate to quantities or delivery dates, and sometimes relates to the specifications of the products we are shipping. Consequently, we cannot be certain that orders on backlog will be shipped when expected or at all.

We expect that, in the future, our revenues in any quarter will continue to be substantially dependent upon purchase orders received in the immediately preceding quarter or two. We cannot assure you that any of our customers will continue to place orders with us in the future at the same levels as in prior periods. For these reasons, our backlog at any given date may not be a reliable indicator of our future revenues and, as a result, revenue and margins' forecasts, targets and guidance that we provide from time to time, may fall short of expectations.

We may manufacture wafers based on forecasted demand, rather than actual orders from customers. If our forecasted demand exceeds actual demand, we may have obsolete inventory, which may have a negative impact on our financial results.

We target manufacturing wafers in an amount matching each customer's specific purchase order. On occasion, we may produce wafers in excess of a customer's orders based on forecasted customer demand, because we may forecast future excess demand or because of future capacity constraints. If we manufacture more wafers than are actually ordered by customers, we may be left with excess inventory that may ultimately become obsolete and must be scrapped or sold at a significant discount. Significant amounts of obsolete inventory may have a negative impact on our financial results.

Our sales cycles are typically long, and orders ultimately received may not meet our expectations, which may adversely affect our operating results.

Our sales cycles, which we measure from first contact with a customer to first shipment of a product ordered by the customer, vary substantially and may last as long as two years or more, particularly for new technologies. In addition, even after we make initial shipments of prototype products, it may take several more months to reach full production of the product. As a result of these long sales cycles, we may be required to invest substantial time and incur significant expenses before receiving any product orders and related revenue. If orders ultimately received are significantly lower than our expectations, we will have excess capacity that we may not be able to fill within a short period of time, resulting in lower utilization of our facilities. In addition to the revenue loss, we may be unable to adjust our costs in a timely manner to align with the lower revenue, since a large portion of our cost is fixed cost, which remains constant irrespective of the number of wafers actually manufactured, which may adversely affect our operating results and financial condition.

If we are unable to purchase equipment and raw materials, we may not be able to manufacture our products in a timely fashion, which may result in a loss of existing and potential new customers and may have an adverse effect on our business and financial results.

To increase the production capability and maintain the quality of production in our facilities, we must procure additional equipment. In periods of high market demand, the lead times from order to delivery of manufacturing equipment could be as long as 12 to 18 months. We also procure used equipment, which can take a long time to qualify to the manufacturing process, potentially delaying the manufacture of our products. In addition, our manufacturing processes use many raw materials, including silicon wafers, chemicals, gases and various metals, and require large amounts of fresh water and electricity. Manufacturing equipment and raw materials generally are available from several suppliers; however, in several instances, we purchase equipment and raw materials from a single source. Shortages in supplies of manufacturing equipment and raw materials could occur due to an interruption of supply or increased industry demand. Any such shortages could result in production delays that may result in a loss of existing and potential new customers, which may have a material adverse effect on our business and financial results.

We are required to comply with the terms of the Israeli Investment Center approved plan and regulations, the terms of which may subject us to liability for specific payments and/or penalties.

We have received grants under certain Israeli Government programs under the Israeli Law for the Encouragement of Capital Investments, 1959 (the "Investment Law"). In 2011, we received an approval certificate from the Investment Center of the Israeli Ministry of Economy and Industry ("Investment Center"), for an expansion program, pursuant to which we received approximately \$36 million in grants for investments made commencing 2006 and through 2012. In 2017, we received approval from the Investment Center for our final performance report in connection with such grant. Eligibility for these approved grants is subject to our satisfying certain conditions stipulated by the Investment Law and the regulations promulgated thereunder, as well as the criteria set forth in the respective certificates of approval for the grants. If we fail to meet these conditions, we may be subjected to significant payment requests and/or penalties by the Investment Center. In addition, in order to secure our obligations in connection with these investment grants, floating liens were registered in favor of the State of

We received Israeli government grants for certain of our research and development activities, the terms of which subject us to certain conditions and restrictions.

We received grants from the Government of Israel through the Israel Innovation Authority ("IIA"), of the Ministry of Economy and Industry, for the financing of a portion of our research and development projects pursuant to the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984 (the "Innovation Law"). Under the terms of the Innovation Law and the grants that we received, the prior approval of the IIA is required for (among other things) the transfer of IIA-funded technology, intellectual property or know-how to a third party outside of Israel, including by way of license, which we may not receive. Any such approval would typically be subject to payment of a redemption fee, in the amount of up to six times the amount of the grants received (less paid royalties, if any, and depreciation, but no less than the total amount of grants actually received by us) plus accrued interest. The foregoing and other restrictions and requirements for payment under the Innovation Law and related regulations may impair our ability to sell our IIA-funded technology assets outside of Israel or to outsource or transfer development or manufacturing activities with respect to any IIA-funded technology outside of Israel.

Our exposure to currency exchange and interest rate fluctuations may impact our costs and financial results.

We operate our fabs in three different regions: Japan, the United States and Israel. The functional currency of the entities operating the fabs in the United States and Israel is USD. The functional currency of our subsidiary in Japan is the JPY. Our expenses and costs are denominated mainly in USD, JPY and NIS, our revenues are denominated mainly in USD and JPY and our cash from operations, investing and financing activities are denominated mainly in USD, JPY and NIS. We are, therefore, exposed to the risk of currency exchange rate fluctuations in Japan and Israel.

The USD cost of our operations in Israel is influenced by changes in the USD-to-NIS exchange rate with respect to costs that are denominated in NIS. During the year ended December 31, 2019, the USD depreciated against the NIS by 7.8%, as compared to 8.1% appreciation during the year ended December 31, 2018.

The fluctuation of the USD against the NIS can affect our results of operations. Appreciation of the NIS has the effect of increasing the cost of some of our Israeli purchases and NIS-denominated labor costs in USD terms, which may lead to erosion in our profit margins. We use foreign currency transactions to partially hedge a portion, but not all of this currency exposure, to be contained within a pre-defined fixed range. In addition, we executed swap hedging transactions to fully hedge our exposure to the fluctuation of the USD against the NIS as far as it relates to our non-convertible Series G debentures which are denominated in NIS.

The majority of TPSCo's revenues are denominated in JPY and the majority of the expenses of TPSCo are in JPY, which limits the exposure to fluctuations of the USD / JPY exchange rate on TPSCo's results of operations as the impact on the revenues is mostly offset by the impact on the expenses. In order to mitigate a portion of the net exposure to the USD / JPY exchange rate over the net profit margins, we have entered into hedging transactions which partially hedge our exposure to the currencies' fluctuation to be contained within a pre-defined fixed range.

During the year ended December 31, 2019, the USD depreciated against the JPY by 1.2%, as compared to 2.4% depreciation during the year ended December 31, 2018. The net effect of USD depreciation against the JPY on TPSCo's assets and liabilities denominated in JPY is presented in Cumulative Translation Adjustment as part of Other Comprehensive Income in the balance sheet.

In addition to currency exchange fluctuations, if any of TPSCo's banks incur increased costs in financing a credit facility due to changes in law or the unavailability of foreign currency, such bank may exercise its right to increase the interest rate on the credit facility or require us to bear such increased cost as provided for in the applicable credit facility agreement.

We also hold a securities investment portfolio, including interest bearing bonds and notes. An increase in the interest rates globally and other market changes may result in a reduced market value of these bonds and notes, thereby creating financing losses for us if we are unable to mitigate exposure, react to the market changes promptly and adjust our securities investment portfolio components in a timely manner.

Although, as described above, we regularly engage in various hedging strategies to reduce our exposure to these risks and intend to continue to do so in the future, we are likely to remain partially exposed to exchange rate fluctuations (mainly NIS and JPY rates as compared to the US dollar), which may have a material effect on our cost and financial results.

We depend on intellectual property to succeed in our business, including intellectual property owned by us as well as intellectual property of third parties. Failure to enforce our intellectual property rights as well as failure to maintain or acquire licenses to intellectual property of third parties may harm our business.

We depend on intellectual property in order for us to provide certain foundry services and design support to our customers. As of December 31, 2019, we held 259 patents in force. We intend to continue to file patent applications when appropriate. The process of applying for patents to obtain patent protection may take a long time and can be expensive. We cannot assure you that patents will be issued for pending or future applications or that, if patents are issued, they will not be challenged, invalidated or circumvented or that the rights granted under the patents will provide us with meaningful protection or any commercial advantage. In addition, we cannot assure you that other countries in which we market our services and products will respect our intellectual property rights to the same extent as the United States. Effective intellectual property enforcement may be unavailable or limited in some countries. We cannot assure you that we will, at all times, be able to enforce our patents or other intellectual property rights and it may be difficult for us to protect our intellectual property from misuse or infringement by other companies in certain countries. Further, we cannot assure you that courts will uphold our intellectual property rights or enforce the contractual arrangements that we have entered into to protect our proprietary technology, which may reduce our opportunities to generate revenues. In the event that we are unable to enforce our intellectual property rights, our business may be harmed.

In addition, with respect to third party intellectual property that is required for the manufacture of our products, if problems or delays arise with respect to the timely development, quality and provision thereof to us, the design and production of our customers' products may be delayed, resulting in underutilization of our capacity. If any of our intellectual property vendors goes out of business, liquidates, merges with, or is acquired by, another company that discontinues the vendor's previous line of business, or if we fail to maintain or acquire licenses to such intellectual property for any other reason, our business may be adversely affected.

From time to time, we are a party to litigation that may require management time and effort and may adversely affect us by harming our business, image and financial results.

From time to time, we are a party to litigation incidental to the conduct of our ongoing business, including class actions, disputes with customers, suppliers, landlords, or other third parties. Litigation usually requires a certain amount of management time and effort which may adversely affect our business by diverting management focus from business needs and development of future strategic opportunities.

In addition, our ability to compete successfully depends in part on our ability to operate without infringing on the proprietary rights of others and defending our intellectual property rights. Because of the complexity of the technologies used and the multitude of patents, copyrights and other overlapping intellectual property rights, it is often difficult for semiconductor companies to determine infringement. Therefore, the semiconductor industry is characterized by frequent litigation regarding patent, trade secret and other intellectual property rights. We have been subject to intellectual property claims from time to time, some of which have been resolved through license agreements, the terms of which have not had a material effect on our business.

We may also be a party to infringement claims in the future. In the event any third party were to assert infringement claims against us or our customers, we may have to consider alternatives including, but not limited to:

● negotiating cross-license agreements;

acquiring licenses to the allegedly infringed patents, which may not be available on commercially reasonable terms, if at all;
discontinuing use of certain process technologies, architectures, or designs, which could cause us to stop manufacturing certain integrated circuits if we are unable to design around the allegedly infringed patents;
litigating the matter in court, incurring substantial legal fees and paying substantial monetary damages in the event we lose; or
developing non-infringing technologies, which may not be feasible.

Any one or several of these alternatives may place substantial financial and other burdens on us and hinder our business. Litigation, which may result in substantial costs to us and diversion of our resources, may be necessary to enforce our patents or other intellectual property rights or to defend us or our customers against claimed infringement. If we fail to obtain certain licenses or if we are involved in litigation relating to alleged patent infringement or other intellectual property matters, it may prevent us from manufacturing particular products or using particular technologies, which may adversely impact our business and revenues.

We could be harmed by failure to comply with environmental regulations.

Our business is subject to a variety of laws and governmental regulations in Israel, the U.S. and Japan relating to the use, discharge and disposal of toxic or otherwise hazardous materials used in Tower's production processes in Israel, Fab 3's production processes in California, Fab 9's production processes in Texas and TPSCo's facilities in Japan. If we fail to use, discharge or dispose of hazardous materials appropriately, or if applicable environmental laws or regulations change in the future, we may be subject to substantial liability or may be required to suspend or significantly modify our manufacturing operations.

We are subject to risk of loss due to fire because the materials we use in our manufacturing processes are highly flammable.

We use highly flammable materials such as silane and hydrogen in our manufacturing processes and are therefore subject to risk of loss arising from fire. The risk of fire associated with these materials cannot be completely eliminated. Although we maintain insurance policies to mitigate any potential losses that may be caused by fire, including business interruption insurance, our insurance coverage may not compensate us fully for all losses incurred due to a fire. If any of our fabs were to be damaged and/or cease operations for a certain period of time as a result of a fire, and if our insurance proves to be inadequate, our manufacturing capacity and revenues may be adversely affected. In addition, a power outage, even of very limited duration, caused by a fire may result in a loss of wafers in production, deterioration of our fab yield, substantial downtime to reset equipment before resuming production and an adverse effect on our revenue and profits.

Our business strategy is premised on the increasing use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers. If this trend does not continue to develop in the manner we expect, our business and financial results may be adversely affected.

We operate as an independent semiconductor foundry focused primarily on specialty process technologies. Our business model assumes that demand for these processes within the semiconductor industry will grow and follow the broader trend towards outsourcing foundry operations. If the broader trend to outsourced foundry services does not prove applicable to the specialty process technologies that we are focused on, our business and financial results may be adversely impacted.

If we are unable to collaborate successfully with electronic design automation vendors and third-party design service companies to meet our customers' design needs, our business may be harmed.

We have established relationships with electronic design automation vendors and third-party design service companies. We work together with these vendors to develop complete design kits that our customers can use to meet their design needs using our process technologies. Our ability to meet our customers' design needs successfully, including their schedule and budget requirements, depends in part on the availability and quality of the relevant services, tools and intellectual property provided by electronic design automation vendors and design service providers. Difficulties or delays in these areas may adversely affect our ability to meet our customers' needs, thereby potentially harming our business.

If we are unable to successfully locate and negotiate with third-party buyers for the sale of any excess and unused equipment, our financial results may be harmed.

From time to time, we may decide to abandon certain product technology lines or a manufacturing facility due to company strategy, low margins or low customer demand, resulting in unused equipment that no longer supports our customers' needs and that, therefore, we may decide to sell to third-party buyers. We also have obsolete or unutilized equipment from time to time which we may sell. If we are unable to successfully locate and negotiate with potential buyers and sell the excess equipment in a timely manner for satisfactory consideration, we may be unable to cover our fixed and other costs associated with such decision, which may have a negative effect on our financial results.

Compliance with existing or future governmental regulations may reduce our sales or increase our manufacturing costs.

The export of semiconductors that we manufacture may be subject to U.S., Israeli and/or Japanese export control and other regulations established by other countries. Compliance with existing or evolving U.S., Israeli, Japanese or other applicable governmental regulations or obtaining timely domestic or foreign regulatory approvals or certificates may materially disrupt our business by reducing our sales, requiring extensive modifications to processes that we use in our product manufacturing and thereby increasing our manufacturing costs, or requiring extensive modifications to our customers' products. We may not export products using or incorporating controlled technology without obtaining an export license. These restrictions may make foreign competitors facing less stringent controls on the export of their products more competitive in the global market. The relevant government may not approve any pending or future export license requests. In addition, the list of products and countries for which export approval is required, and the regulatory policies with respect thereto, may be modified from time to time.

If certain of the integrated circuits we manufacture are defective and integrated into products, we may be subject to product liability claims or other claims which could damage our reputation and harm our business.

Our customers integrate our custom integrated circuits into their products, which they then sell to end users. If these products are defective or malfunction, we may be subject to product liability claims, as well as possible recalls, safety alerts or advisory notices relating to the product. We cannot assure you that our insurance policies will compensate us fully for claims that may be made against us. In addition, we may be unable to obtain insurance in the future at satisfactory rates, with adequate coverage, or at all. Product liability claims or product recalls in the future, regardless of their ultimate outcome, may have a material adverse effect on our business, reputation, financial condition and our ability to attract and retain customers.

A workforce that is unionized may have an adverse impact on our manufacturing costs as well as on our operations by work stoppages, strikes or other collective actions which may disrupt the fabs' production and adversely affect the fabs' performance, our customers and our operational and financial results.

A significant portion of the employees at the Newport Beach, California fab are represented by a union and covered by a collective bargaining agreement, which was renewed for three additional years, effective as of July 1, 2018. Similarly, a significant portion of TPSCo's employees at its fabs in Japan are represented by a union and covered by a collective bargaining agreement. In addition, employees at our fabs in Israel, who currently are not members of any union, may wish to join a union in the future. We cannot predict the effect that union representation or future organizational activities will have on these fabs' manufacturing cost and business. Specifically, under TPSCo's collective bargaining agreement, the union and TPSCo are required to first negotiate any points of dispute before taking any action such as work stoppages, strikes or other collective actions. We cannot assure you that our fabs will not experience a material work stoppage, strike or other collective action in the future, or incur increased costs in connection with the renewal of such bargaining agreements or other potential union activities, which may disrupt their production and adversely affect our fabs' manufacturing costs, operational performance metrics, our customers and our operational and financial results.

Climate change may negatively affect our business.

There is increasing concern regarding climate change and its potential dramatic effects on human activity if no aggressive remediation steps are taken. Legislative developments with respect to reductions in greenhouse gas emissions may result in increased energy, transportation and raw material costs. Scientific examination of, political attention to, and rules and regulations on, issues surrounding the existence and extent of climate change may result in increased production costs due to increase in the prices of energy and introduction of energy or carbon tax. A variety of regulatory developments have been introduced that focus on restricting or managing emissions of carbon dioxide, methane and other greenhouse gases. Enterprises may need to purchase new equipment at higher costs or raw materials with lower carbon footprints. These developments and further legislation that is likely to be enacted may adversely affect our operations. Changes in environmental regulations, such as those on the use of per fluorinated compounds, may increase our production costs, which may adversely affect our results of operation and financial condition.

In addition, more frequent droughts and floods, extreme weather conditions and rising sea levels may occur due to climate change. For example, transportation suspension caused by extreme weather conditions, including snowstorms, may harm the distribution of our products. We cannot predict the economic impact, if any, of disasters resulting from climate change.

Compliance with the US conflict minerals requirements enacted pursuant to the Dodd-Frank Act may affect our ability or the ability of our suppliers to purchase raw materials at an effective cost and may adversely affect our business.

Many industries rely on materials which are subject to regulation concerning certain minerals sourced from the Democratic Republic of Congo ("DRC") or adjoining countries, which include Sudan, Uganda, Rwanda, Burundi, United Republic of Tanzania, Zambia, Angola, Congo, and Central African Republic. These minerals are commonly referred to as conflict minerals. Conflict minerals which may be used in our industry or by our suppliers include Columbite-tantalite (derivative of tantalum [Ta]), Cassiterite (derivative of tin [Sn]), gold [Au], Wolframite (derivative of tungsten [W]), and Cobalt [Co]. We are subject to the requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, that require due diligence and disclosure as to whether our products contain conflict minerals. The Trump administration has indicated that the Dodd-Frank Act will be under further scrutiny and some of the provisions of the Dodd-Frank Act may be revised, repealed or amended. In April 2017, the SEC announced suspension of enforcement of portions of the conflict minerals regulations enacted under the Dodd-Frank Act following a ruling by the U.S. Court of Appeals for the District of Columbia Circuit. The potential implementation of these requirements and any changes effected by the Trump administration could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of components used in our products. In addition, we will likely incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of conflict minerals that may be used in or necessary to the production of our products and, if applicable, potential changes to our products, processes or sources of supply as a consequence of such verification activities. It is also possible that we may face reputational harm if we determine that certain of our products contain minerals not determined to be conflict-free or may lose customers and adversely impact our revenue and business if we are unable to alter our products, processes or sources of supply to avoid use of such materials. We may encounter challenges in satisfying those customers that require that all of the components of our products be certified as conflict free, and if we cannot satisfy these customers, they may choose a competitor's products.

Security, cyber and privacy breaches may hurt our business and operations.

Any security breach, including those resulting from a cybersecurity attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss of confidential information, damage to our fab operations, damage to our reputation, early termination of our contracts, litigation, regulatory investigations or other liabilities. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to our, our customers' or any third party's confidential information, our reputation may be damaged, our business may suffer, and we could incur significant liability.

Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived security breach occurs, the market's perception of our security measures may be harmed and we could lose sales and customers as well as incur operational damage to our machines and/or products.

Risks Related to Our Securities and the Offering

Fluctuations in the market price of our traded securities may significantly affect our ability to raise new capital.

The capital markets, in general, have experienced volatility that often has been unrelated to the operating performance of the traded companies. The share price of many companies in the semiconductor industry has experienced wide fluctuations, which has often been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the market price of our equity and debt traded securities, regardless of our actual operating performance.

In addition, it is possible that our operating results may differ from the expectations of public market analysts and investors, which may adversely affect the price of our securities. Adverse impact to the market price of our securities may negatively impact our ability to raise new capital in order to finance our growth plans, obligations and liabilities and/or re-finance our debt, and/or may cause us to receive less favorable terms than expected to the extent we will decide to raise any capital.

We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to the Securities Exchange Act of 1934 reporting obligations that, to some extent, are more lenient and less frequent than those applicable to a U.S. issuer.

We report under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as a foreign private issuer. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. We intend to furnish quarterly reports to the SEC on Form 6-K for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Exchange Act, although the information we furnish may not be the same as the information that is required in quarterly reports on Form 10-Q for U.S. domestic issuers. In addition, while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required to file their annual reports on Form 10-K within 90 days after the end of each fiscal year, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation FD (Fair Disclosure), aimed at preventing issuers from making selective disclosures of material information. Although we intend to make interim reports available to our shareholders in a timely manner, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

As a foreign private issuer, we are permitted, to follow, and follow, certain home country corporate governance practices instead of otherwise applicable Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under the Listing Rules of the Nasdaq Stock Market for domestic U.S. issuers. For instance, we follow home country practice in Israel with regard to, among other things, the director nomination process, the approval of compensation of officers and quorum requirements at general meetings of our shareholders. In addition, we follow our home country law instead of the Listing Rules of the Nasdaq Stock Market that require us to obtain shareholder approval for certain dilutive events, such as the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or greater interest in the company, and certain acquisitions of the stock or assets of another company. Following our home country governance practices as opposed to the requirements that would otherwise apply to a United States company listed on Nasdaq may provide less protection to you than what is accorded to investors under the Listing Rules of the Nasdaq Stock Market applicable to domestic U.S. issuers.

Similarly, as an Israeli company listed on the Nasdaq Stock Market and the TASE, we are permitted to rely on certain relief granted to foreign listed companies under regulations promulgated under the Companies Law. For instance, we adopted the exemption under Israel law permitting a company whose shares are traded on certain stock exchanges outside Israel (including the Nasdaq Global Select Market, such as our company) that does not have a controlling shareholder, from the requirement to appoint external directors under Israeli law and related provisions, including regarding the composition of the audit committee and compensation committee, provided that it complies with the requirements of the laws of the foreign jurisdiction where the company's shares are listed, as they apply to domestic issuers, with respect to the appointment of independent directors and the composition of the audit committee and compensation committee.

If we lose our status as a foreign private issuer under the SEC's rules, our compliance costs will increase.

We would lose our foreign private issuer status if more than 50 percent of our outstanding voting securities are directly or indirectly held of record by residents of the United States and if a majority of our directors or executive officers are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we cease to qualify as a foreign private issuer, the regulatory and compliance costs for us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We would also be required to follow U.S. proxy disclosure requirements, including the requirement to disclose more detailed information about the compensation of our senior executive officers on an individual basis. We may also be required to modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

We do not expect to pay any dividends in the foreseeable future.

We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings to finance our growth and acquisition strategy, as well as capacity growth and our ongoing operations. Our board of directors has sole discretion whether to pay dividends. If our board of directors will decide to pay dividends, the form, frequency and amount will depend upon our future growth and acquisition strategy, as well as our capacity growth plans, future operations and earnings, capital requirements and surplus, general financial condition, contractual and legal restrictions and other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. Furthermore, under the indenture for our Series G Debentures, a distribution of dividends is subject to us satisfying certain financial covenants and is subject to certain limitations. Therefore, you should not rely on an investment in our ordinary shares if you require and/ or expect dividend income from your investments.

Risks Related to Our Operations in Israel

Instability in Israel may harm our business.

Fab 1 and Fab 2 manufacturing facilities, our design center and certain of our corporate and sales offices are located in Israel. In addition, a number of our officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business.

Since the establishment of the State of Israel in 1948, Israel has been subject to arm conflicts with neighboring countries, as well as terrorist activities, with varying levels of severity. Parties with whom we do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements where necessary. In addition, the political and security situation in Israel may result in parties with whom we have agreements claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions. We can give no assurance that security and political conditions will not adversely impact our business in the future. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners may adversely affect our operations and make it more difficult for us to do business and raise capital. Furthermore, we could experience serious disruption to our manufacturing in Israel if acts associated with any such conflicts result in any serious damage to such manufacturing facilities. In addition, there may also be protests against or sanctions imposed on the State of Israel which may adversely impact our business. Our business interruption insurance may not adequately compensate us for losses that we may incur, and any losses or damages incurred by us may have a material adverse effect on our business. Furthermore, several countries restrict business with the State of Israel and with Israeli companies, which may have an adverse impact on our operating results and financial condition.

In the event of severe unrest or other conflict, Israeli personnel could be required to serve in the military for extended periods of time. In response to increases in terrorist activity, there have been periods of significant call-ups of Israeli military reservists, and it is possible that there will be additional call-ups in the future. Many male Israeli citizens, including most of our male employees under the age of 40, are subject to compulsory military reserve service and may be called to active duty under emergency circumstances. Our operations in Israel could be disrupted by the absence, for a significant period of time, of one or more of our key employees or a significant number of our other employees due to military service. Such disruption may harm our operations and our business.

If the exemption allowing us to operate our Israeli manufacturing facilities seven days a week or our business license is not renewed, our business may be adversely affected.

We operate our Israeli manufacturing facilities seven days a week pursuant to an exemption (which we need to timely renew) from the law that requires businesses in Israel to be closed from sundown on Friday through sundown on Saturday. In addition, our business license certificate issued by municipality of Migdal Ha'emek, Israel is required to be renewed periodically. If such exemption or our business license are not renewed in the future, our financial results and business may be harmed.

It may be difficult to enforce a US judgment against us, our officers and directors and some of the experts named in this prospectus or to assert US securities law claims in Israel or serve process on our non-U.S. resident officers and directors.

Tower is incorporated in Israel and most of its executive officers and directors are not residents of the United States (excluding the employees of its U.S. subsidiaries), and a majority of its assets (excluding its U.S. subsidiaries and their assets) and the assets of its non-U.S. resident directors and officers and some of the experts named in this prospectus are located outside the United States. Service of process upon us or our non-U.S. resident directors, officers and experts may be difficult to obtain within the United States. Additionally, a judgment obtained in the United States against Tower or any of our non-U.S. executive officers and directors, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States (except to the extent that it relates to Tower's US subsidiaries, its assets or employees) and may not be enforced by an Israeli court. Additionally, it may be difficult to assert claims under U.S. securities laws or obtain a judgment based on civil liability provisions under U.S. federal securities laws claimed in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a timeconsuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above.

Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which may delay or prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

Provisions of Israeli law could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire us, even if doing so would be considered to be beneficial by some of our shareholders. For example, Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares of a public company above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. Furthermore, Israeli tax considerations may make potential transactions unappealing to Tower or to its shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. These and other similar provisions may delay, prevent or impede a merger with or an acquisition of our company, even if such a merger or acquisition would be beneficial to Tower or its shareholders.

The rights and responsibilities of our shareholders will be governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. corporations.

The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in typical U.S. registered corporations. In particular, a shareholder of an Israeli company has certain duties to act in good faith and in a customary manner in exercising his or her rights and fulfilling his or her obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on amendments to a company's articles of association, increases in a company's authorized share capital, mergers and certain transactions requiring shareholders' approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the company or has other powers toward the company has a duty of fairness toward the company. However, Israeli law does not define the substance of this duty of fairness. There is limited case law available to assist in understanding the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

3.6 Material Changes

No material changes have occurred since December 31, 2019 that are not disclosed in this prospectus or in our Annual Report on Form 20-F for the year ended December 31, 2019.

3.7 Summary Terms of the Offer

We may offer and sell, from time to time, pursuant to this prospectus an indeterminate number of securities in one or more offerings.

Each time we sell securities under this prospectus, we will provide a supplemental shelf offering report containing specific information about the terms of that offering. The shelf offering report may also add, update or change information contained in this prospectus. To the extent that any information we provide in a shelf offering report is inconsistent with information in this prospectus, the information in the shelf offering report will modify or supersede this prospectus. You should read this prospectus and any shelf offering report with additional information described below under Section 3.13 "Where You Can Find More Information" carefully before purchasing any of our securities. We will not use this prospectus to confirm sales of any securities that are being registered but not offered under this prospectus, unless it is attached to a shelf offering report.

We may offer and sell any combination of securities in one or more offerings hereunder. We may sell these securities to or through underwriters, distributors and agents, or directly to purchasers. We will provide the specific plan of distribution for any securities to be offered by us in a supplemental prospectus shelf offering report.

3.8 Use of Proceeds

Our management will have broad discretion in the application of the net proceeds from any sales of securities pursuant to this prospectus. The use of proceeds will be detailed in the applicable supplemental shelf offering reports.

Unless we state otherwise in a supplemental shelf offering report, we anticipate using the net proceeds from the sale of securities under this prospectus for general corporate and working capital purposes, including the repayment of indebtedness and purchase of additional manufacturing capacity, equipment and technologies. The proceeds may also be used for purposes of mergers and acquisitions and to acquire businesses, products and semiconductor facilities.

3.9 Capitalization and Indebtedness

We will provide information regarding our capitalization and indebtedness in any shelf offering report that we will publish pursuant to this prospectus.

3.10 Description of Securities and History of Share Capital

We will describe in the applicable supplemental shelf offering report relating to any securities the particular terms of the securities offered by that supplemental shelf offering report. This base prospectus may not be used to consummate a sale of securities unless it is accompanied by a supplemental shelf offering report.

Our authorized share capital consists of 150 million ordinary shares, par value NIS 15.0 per share, of which 106.8 million shares were issued and outstanding as of December 31, 2019.

As of December 31, 2019, 86,667 ordinary shares were held as treasury shares.

As of December 31, 2019, our directors, officers and employees held options to purchase an aggregate of approximately 318,500 ordinary shares and restricted stock units for an aggregate of approximately 2 million ordinary shares under our 2013 Share Incentive Plan. The options have an average exercise price of approximately \$8.43 per share and expire between 2020 and 2023.

In 2017, 2018 and 2019, options to purchase approximately 1.6 million, 70,000 and 163,000 ordinary shares, respectively, were exercised by our directors, officers and employees. In 2017, 2018 and 2019, restricted stock units for approximately 553,000, 602,000 and 485,000 ordinary shares, respectively, vested.

During 2018, approximately 5.8 million ordinary shares were issued upon conversion of un-secured convertible senior notes maturing December 31, 2018. As of December 31, 2018 and 2019, no such convertible notes were outstanding.

During 2017 and 2019, equity equivalent capital notes converted into 930,000 and 1.2 million ordinary shares, respectively. As of December 31, 2019, no such capital notes were outstanding.

In 2017 and 2018, warrants held by our lending banks were exercised into an aggregate of approximately 110,000 and 59,000 ordinary shares, respectively. As of December 31, 2018 and 2019, no such warrants were outstanding.

In 2017, Warrants Series 9 issued in 2013 were exercised into an aggregate of approximately 2.3 million ordinary shares. As of December 31, 2017, 2018 and 2019 no such warrants were outstanding.

3.11 Expenses of the Offering

The aggregate amount that we will pay for arrangement fees, distribution fees, commitment fees and other commissions and expenses in connection with an offering under this shelf prospectus will be published in the supplemental shelf offering reports.

3.12 Incorporation of Certain Information by Reference

We are allowed to incorporate by reference into this prospectus the information we file with the SEC and the ISA, which means that we can disclose important information to you by referring to those filings. Information incorporated by reference is considered to be part of this prospectus. We are incorporating by reference in this prospectus the documents listed below, as well as any future filings we make with the SEC and ISA on Form 20-F and on Form 6-K (to that extent that such Form 6-K indicates that it is intended to be incorporated by reference herein) prior to the completion of an offering of securities under this prospectus. Information that we file in the future with the SEC that is incorporated by reference herein automatically updates and supersedes any information in this prospectus.

Annual Report on Form 20-F for the year ended December 31, 2019, filed with the SEC on April 30, 2020;
Reports of Foreign Private Issuer on Form 6-K filed with the SEC on May 6, 2020; and
The description of our ordinary shares which is contained in our Registration Statement on Form 8-A declared effective on October 25, 1994, and any amendment or report filed for the purpose of updating that description.

As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and this prospectus, you should rely on the statements made in the most recent document. All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents incorporated by reference herein.

We will provide each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any of the documents incorporated herein by reference, at no cost, upon written or oral request, at: Tower Semiconductor Ltd., Ramat Gavriel Industrial Park, P.O. Box 619, Migdal Haemek, Israel, 2310502, Tel: 972-4-650-6109, Attention: Chief Legal Officer

and Corporate Secretary.

You should rely only on the information contained or incorporated by reference in this prospectus or any supplement thereof. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and any arranger or agent is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, or such earlier date that is indicated in this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

3.13 Where You Can Find More Information

We are subject to the reporting requirements of the Exchange Act that are applicable to a foreign private issuer. In accordance therewith, we file annual reports and other information with the SEC. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. Notwithstanding the foregoing, we furnish reports to the SEC on Form 6-K containing unaudited financial information for the first three quarters of each fiscal year.

Information filed with the SEC by us can be inspected and copied at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC at prescribed rates. Further information on the operation of the SEC's Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330.

The SEC also maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov. You can also access reports filed by us with the ISA through the MAGNA distribution site of the ISA at www.magna.isa.gov.il. We also generally make available on our web site (http://www.towersemi.com) our annual report on Form 20-F containing our year-end financial statements as well as other information filed with the SEC. The information and other content available on our website are not a part of this prospectus.

3.14 Indemnification of Directors and Officers

Exculpation of Office Holders

The Companies Law provides that an Israeli company may not exculpate an office holder from liability for a breach of the duty of loyalty, but may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our articles of association to include such a provision. An Israeli company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders.

Indemnification of Office Holders

An Israeli company may indemnify an office holder in respect of the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles of association:

financial liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator's award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company's activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria;
reasonable litigation expenses, including attorneys' fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent and (2) in connection with a monetary sanction;
reasonable litigation expenses, including attorneys' fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law, 1968 (the "Israeli Securities Law").

Insurance for Office Holders

An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company's articles of association:

a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder;
a financial liability imposed on the office holder in favor of a third-party;
a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding; and
expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her pursuant to certain provisions of the Israeli Securities Law.

Limitations on Exculpation, Insurance and Indemnification

Under the Companies Law, an Israeli company may not exculpate, indemnify or insure an office holder against any of the following:

a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
an act or omission committed with intent to derive illegal personal benefit; or
a fine, monetary sanction or forfeit levied against the office holder.

Our articles of association allow us to indemnify and insure our office holders for any liability imposed on them as a consequence of an act (including any omission) which was performed by virtue of being an office holder to the extent permitted by applicable law. Our office holders are currently covered by a directors' and officers' liability insurance policy.

We have entered into agreements with each of our directors and executive officers exculpating them, to the fullest extent permitted by law, from liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by law, in each case in excess of amounts received under any insurance policy and any other indemnification arrangement. The indemnification is limited to events determined as foreseeable by the board of directors based on our activities, and to an amount determined by the board of directors as reasonable under the circumstances. The total amount of indemnification for each instance of indemnifiable liabilities shall not exceed 25% of our then current fully paid up equity and shall not be less than \$30 million (in addition to and exclusive of any amounts paid under insurance coverage)

In the opinion of the SEC, indemnification of directors and officers for liabilities arising under the Securities Act of 1933, as amended, however, is against public policy and therefore unenforceable.

3.15 Legal Matters

Certain legal matters with respect to Israeli law are being passed upon for us by Fischer Behar Chen Well Orion & Co, our Israeli counsel, and certain legal matters with respect to United States law are being passed upon for us by Eilenberg & Krause LLP, our U.S. counsel.

3.16 Experts

The consolidated financial statements and management's assessment of effectiveness of internal control over financial reporting as of December 31, 2019 incorporated in this prospectus by reference to our Annual Report on Form 20-F for the year ended December 31, 2019, have been audited by Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, an independent registered public accounting firm, as stated in its reports thereon, which are incorporated herein by reference. Such financial statements and financial statement schedules have been so incorporated herein in reliance upon the reports of such firm given upon the authority of such firm as experts in accounting and auditing.

3.17 Undertakings

The undersigned registrant hereby undertakes, mutatis mutandis, to the extent applicable to an offering of securities solely in Israel to residents of Israel and which has not been registered with the United States Securities and Exchange Commission:

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act of

1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, a post-effective amendment need not be filed to include financial statements and information required by section 10(a)(3) of the Securities Act of 1933 or Rule 3-19 of Regulation S-X if such financial statements and information are contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended that are incorporated by reference in the Form F-3.

(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i) If the registrant is relying on Rule 430B:

(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

ד 1

פרק - 4 פרטים נוספים

6.1 חוות דעת עורך דין

החברה קיבלה את חוות הדעת המשפטית הבא :ה

לכבוד 12 במאי 2020 טאואר סמיקונדוקטור בע"מ )"החברה"( איזור התעשייה רמת גבריאל מגדל העמק, 23105

א.ג.נ,.

הנדון: תשקיף מדף של החברה )"התשקיף"(

לבקשתכם , הרינו לאשר כי הדירקטורים של החברה נתמנו כדין ושמותיהם נכללים בתשקיף .

אנו מסכימים כי חוות דעת זו תיכלל בתשקיף .

בכבוד רב,

ניצן סנדור, עו"ד שרון רוזן, עו"ד ענבל גאון, עו"ד

פישר בכר חן וול אוריון ושות'

6.2 מכתב הסכמה של רואי החשבון

לכבוד 12 במאי 2020 הדירקטוריון של טאואר סמיקונדקטור בע מ"

א.ג.נ.,

הנדון: תשקיף מדף של טאואר סמיקונדקטור בע"מ )"החברה")

אנו מסכימים להכללה בדרך של הפניה בתשקיף המדף של החברה ") תשקיף המדף (" , של דוחות רואה החשבון המבקר שנחתמו על ידינו בתאריך 2 במר ס 2020 , המתייחסים לדוחות הכספיים המאוחדים של החברה וכן לאפקטיביות של בקרה פנימית על הדיווח הכספי של החברה, ליום 31 בדצמבר ,2019 אשר הוגשו על ידי החברה -ל Commission Exchange and Securities States United ולרשות ניירות ערך בישראל במסגרת דוח F20- לשנת 2019 ביום 30 ב אפריל 2020 . בנוסף, אנו מסכימים להכללת שמנו בתשקיף המדף תחת הכותרת "Experts", כמשמעות המונח "Expert "תחת ה- 1933 of Act Securities.

מכתב זה ניתן לפי בקשת החברה ומיועד אך ורק להיכלל בתשקיף המדף של החברה, אשר יוגש לרשות ניירות ערך בישראל בחודש מאי .2020

בכבוד רב ,

בריטמן אלמגור זהר ושות ' רואי חשבון

A Firm in the Deloitte Global Network

תל אביב, 12 במאי 2020

6.3 אגרת בקשה למתן היתר לפרסום תשקיף

בהתאם להוראות תקנה 4 א לתקנות ניירות ערך )אגרת בקשה למתן היתר לפרסום תשקיף(, התשנ"ה,1995- החברה שילמה לרשות לניירות ערך אגרת בקשה למתן היתר לפרסום תשקיף זה, ואולם, תוספת האגרה תשולם בעד ניירות הערך המוצעים במועד פרסום דוח הצעת המדף )ככל ויפורסם(, בסכומים ובמועדים אשר נקבעו בתקנות האמורות.

6.4 עיון במסמכים

עותק מתשקיף זה, מההיתר לפרסומו, מכל חוות דעת או אישור הנזכרים בתשקיף זה וכן עותק ממסמכי ההתאגדות של החברה , ניתנים לעיון באתר ההפצה של רשות ניירות ערך שכתובתו הינה: il.gov.isa.magna.www ובמשרדה הרשום של החברה: איזור התעשייה רמת גבריאל , מגדל העמק, 23105 , בשעות העבודה הרגילות.

חתימות

החברה

טאואר סמיקונדקטור בע"מ

הדירקטורים

אמיר אלשטיין, יו"ר

ראסל אלוואנגר

קלמן קאופמן

אלכס קורנהאוזר

דנה גרוס

אילן פלטו

רמי גוזמן

יואב שלוש

איריס אבנר

AI assistant

Tower Semiconductor Ltd. — Capital/Financing Update 2020

7095_rns_2020-05-13_ba1eb4f5-9bbb-4c3f-a50f-04af66a5c932.pdf

טאואר סמיקונדקטור בע"מ

)" חה ברה"(

תשקיף מדף

)"התשקיף או "תשקיף המדף"(

תוכן עניינים

פרק - 1 מבוא

1.1 כללי

1.2 היתרים ואישורים

1.3 פטור רשות ניירות ערך

1 1.3.7 הוראות מודל הגילוי ההיברידי

CHAPTER 3

3.1 General

3.2 Forward-Looking Statements

3.3 Summary Information Regarding the Company

Our History

Business Overview

3.4 Selected Consolidated Financial Data

You should carefully read the following selected Consolidated Financial Data in conjunction with "Item 5- Operating and Financial Review and Prospects" of our Annual Report on Form 20-F for the year ended December 31, 2019.

3.5 Risk Factors

Risks Affecting Our Business

If we experience difficulty in achieving acceptable device yields, product performance and delivery times, as a result of manufacturing problems, our business may be adversely harmed.

Demand for our foundry services is dependent on the demand in our customers' end markets, which are typically cyclical and volatile. A material decrease in demand for products that

contain semiconductors may decrease the demand for our services and products, and a decrease in the selling prices of our customers' products may significantly affect our business, financial results and financial position.

If we do not maintain and develop our technology processes and services, we may lose customers and may be unable to attract new ones.

The semiconductor foundry business is highly competitive and our competitors may have competitive advantages over us; our financial results may be adversely affected if we do not successfully compete in the industry.

Our financial results may fluctuate from quarter to quarter, making it difficult to predict our future performance, which may negatively affect our financial position and financial results.

We may be required to obtain financing for strategic opportunities, which financing may not

be available for us in a timely manner or on favorable terms, and which may dilute the holdings of our shareholders and/or require us to incur additional debt.

If we do not maintain our current key customers, and/or do not attract new key customers, our business and profitability may be adversely affected.

Risks relating to construction activities adjacent to Fab 3 and our Fab 3 lease could harm our operations and financial results.

A global recession and/or, unfavorable economic conditions, global disease, credit crisis and/or weakness in the semiconductor industry may adversely affect our results and our ability to fulfill our debt obligations and other liabilities.

Our reliance on acquisitions and/or gaining additional capacity for growth involve risks that may adversely affect our future revenues, business and operating results.

Our financial results may be adversely affected if we are unable to operate our facilities at satisfactory utilization rates necessary to generate and maintain positive and sustainable gross, operating and net profits.

Our fabs' production performance metrics and business could be significantly harmed by natural disasters, particularly earthquakes.

Possible product returns could harm our business.

We are subject to risks related to our international operations.

Our financial position and operations may be affected as a result of our long-term debt.

If we are unable to manage fluctuations in cash flow, our business and financial position may be adversely affected.

Over-demand for our foundry services and/or products may result in a loss of customers and revenues, which may adversely affect our profitability and business.

Our business could suffer if we are unable to retain and recruit qualified personnel.

The lack of a significant backlog resulting from our customers not placing purchase orders far in advance makes it difficult for us to forecast our revenues and margins in future periods and may cause actual revenue and results to fall short of expectations.

We may manufacture wafers based on forecasted demand, rather than actual orders from customers. If our forecasted demand exceeds actual demand, we may have obsolete inventory, which may have a negative impact on our financial results.

Our sales cycles are typically long, and orders ultimately received may not meet our expectations, which may adversely affect our operating results.

If we are unable to purchase equipment and raw materials, we may not be able to manufacture our products in a timely fashion, which may result in a loss of existing and potential new customers and may have an adverse effect on our business and financial results.

We are required to comply with the terms of the Israeli Investment Center approved plan and regulations, the terms of which may subject us to liability for specific payments and/or penalties.

We received Israeli government grants for certain of our research and development activities, the terms of which subject us to certain conditions and restrictions.

Our exposure to currency exchange and interest rate fluctuations may impact our costs and financial results.

From time to time, we are a party to litigation that may require management time and effort and may adversely affect us by harming our business, image and financial results.

We could be harmed by failure to comply with environmental regulations.

We are subject to risk of loss due to fire because the materials we use in our manufacturing processes are highly flammable.

Our business strategy is premised on the increasing use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers. If this trend does not continue to develop in the manner we expect, our business and financial results may be adversely affected.

If we are unable to collaborate successfully with electronic design automation vendors and third-party design service companies to meet our customers' design needs, our business may be harmed.

If we are unable to successfully locate and negotiate with third-party buyers for the sale of any excess and unused equipment, our financial results may be harmed.

Compliance with existing or future governmental regulations may reduce our sales or increase our manufacturing costs.

If certain of the integrated circuits we manufacture are defective and integrated into products, we may be subject to product liability claims or other claims which could damage our reputation and harm our business.

Climate change may negatively affect our business.

Compliance with the US conflict minerals requirements enacted pursuant to the Dodd-Frank Act may affect our ability or the ability of our suppliers to purchase raw materials at an effective cost and may adversely affect our business.

Security, cyber and privacy breaches may hurt our business and operations.

Risks Related to Our Securities and the Offering

Fluctuations in the market price of our traded securities may significantly affect our ability to raise new capital.

We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to the Securities Exchange Act of 1934 reporting obligations that, to some extent, are more lenient and less frequent than those applicable to a U.S. issuer.

As a foreign private issuer, we are permitted, to follow, and follow, certain home country corporate governance practices instead of otherwise applicable Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.

If we lose our status as a foreign private issuer under the SEC's rules, our compliance costs will increase.

We do not expect to pay any dividends in the foreseeable future.

Risks Related to Our Operations in Israel

Instability in Israel may harm our business.

If the exemption allowing us to operate our Israeli manufacturing facilities seven days a week or our business license is not renewed, our business may be adversely affected.

It may be difficult to enforce a US judgment against us, our officers and directors and some of the experts named in this prospectus or to assert US securities law claims in Israel or serve process on our non-U.S. resident officers and directors.

Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which may delay or prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

The rights and responsibilities of our shareholders will be governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. corporations.

3.6 Material Changes

3.7 Summary Terms of the Offer

3.8 Use of Proceeds

3.9 Capitalization and Indebtedness

3.10 Description of Securities and History of Share Capital

3.11 Expenses of the Offering

3.12 Incorporation of Certain Information by Reference

Tower Semiconductor Ltd. Capital/Financing Update 2020