Tower Semiconductor Ltd. — Earnings Release 2003

Jan 22, 2004

NEWS RELEASE

TOWER SEMICONDUCTOR LTD. PRE-ANNOUNCES FOURTH QUARTER AND 2003 EXPECTED RESULTS

MIGDAL HAEMEK, Israel — January 22, 2004 — Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM) today announced expected results for the fourth quarter and year ended December 31, 2003.

Sales for the fourth quarter of 2003 are expected to be approximately in the range of $19.5 million and $20 million. Fourth quarter loss is expected to be approximately in the range of $45 million and $47 million.

Sales for the year ended December 31, 2003 are expected to be approximately in the range of $61.1 million and $61.6 million. Loss for the year ended December 31, 2003 is expected to be approximately in the range of $113 million and $115 million.

Tower expects to release its fourth quarter and year-end results on Monday, February 2, 2004.

About Tower Semiconductor Ltd.

Tower Semiconductor Ltd. is a pure-play independent wafer foundry established in 1993. The company manufactures integrated circuits with geometries ranging from 1.0 to 0.18 microns; it also provides complementary technical services and design support. In addition to digital CMOS process technology, Tower offers advanced non-volatile memory solutions, mixed-signal and CMOS image-sensor technologies. To provide world-class customer service, the company maintains two manufacturing facilities: Fab 1 has process technologies from 1.0 to 0.35 microns and can produce up to 16,000 150mm wafers per month. Fab 2 features 0.18-micron and below process technologies, including foundry-standard technology. When complete, Fab 2 is expected to offer full production capacity of 33,000 200mm wafers per month. The Tower Web site is located at www.towersemi.com.

Safe Harbor

This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with (i) obtaining the approval of the Israeli Investment Center to extend the five-year investment period under our Fab 2 approved enterprise program and of amendments to our modified business plan, (ii) market acceptance and competitiveness of the products to be manufactured by us for customers using these technologies, as well as obtaining additional business from new and existing customers, (iii) our ability to obtain additional financing for the Fab 2 project from equity and/or wafer partners, the Israeli Investment Center, our banks, and/or other sources, as required under the Fab 2 business plan and pursuant to our agreements with our wafer and equity partners, banks and the Israeli Investment Center, (iv) ramp-up of production at Fab 2,

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(v) completion of the development and/or transfer of advanced process technologies to be utilized in Fab 1 and in Fab 2, (vi) initial production difficulties we may experience in connection with the functionality of the equipment installed in Fab 2 during its early manufacturing period and (viii) conditions in the market for foundry manufacturing services and for semiconductor products generally. A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in our most recent Annual Report on Form 20-F and Form F-3, as were filed with the Securities and Exchange Commission and the Israel Securities Authority.

Investor Relations Contact Sheldon Lutch Fusion IR & Communications +1 (212) 268 1816 sheldon@fusionir.com

PR Agency Contact Bruce Hokanson Loomis Group +1 (360) 574 4000 hokanson@loomisgroup.com

Corporate Contact Michael Axelrod Tower Semiconductor USA +1 (408) 330 6871 pr@towersemi.com