Tower Semiconductor Ltd. — Capital/Financing Update 2006

Jan 27, 2006

TOWER SEMICONDUCTOR LTD.

Notice of Results of Rights Offering pursuant to the Prospectus dated December 15, 2005 in accordance with Section 30 of the Israel Securities Law, 5728-1968

Pursuant to the prospectus of Tower Semiconductor Ltd. (the “Company”) dated December 15, 2005 (permit reference no.2005-02-077505), the Company offered by way of rights to its shareholders and also to employees who held options to purchase the Company’s ordinary shares under share option plans entitling them to participate in a rights offering, 50 million U.S. dollar denominated debentures, principal amount of $1.00 each, convertible into the Company’s ordinary shares, par value NIS 1.00 per share. Each right entitled the holder to purchase at a price of $100.00, 100 U.S. dollar denominated convertible debentures.

Rights were exercised for the purchase of 48,169,300 convertible debentures, $1.00 principal amount each. This figure includes rights exercised by certain of the Company’s major shareholders for the purchase of $25.5 million principal amount of convertible debentures, pursuant to their commitments as described in the prospectus.

Aggregate gross proceeds received by the Company from the rights offering totaled $US 48,169,300 (approximately NIS 223,361,044).

The Company expresses its appreciation to its shareholders, employees and to investors for their response to the rights offering.

Tower Semiconductor Ltd.