Slide 1: 2011 Results and Growth Engines
1 2011 Results and Growth Engines February 16, 2012
Slide 2: Safe Harbor and Disclaimers
2 Safe Harbor and Disclaimers This presentation contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of r
Slide 3: Outline
3 Outline • 2011 FY and Q4 Financials Results Overview • Business and Strategy Overview • Past, Present, Future
Slide 4: 2011 FY and Q4 Financials Results Highlights
4 2011 FY and Q4 Financials Results Highlights
Slide 5: Q4 & FY 2011 Financial Results Highlights
5 Revenue Profitability Balance Sheet Q4 & FY 2011 Financial Results Highlights § FY 2011: $611M , up 20% Y/Y vs. $509M in 2010 and up 2X vs. $299M in 2009 § Q4 2011: $175M , up 29% vs. $135M in Q4 2010 § EBITDA of $187M in FY 2011, a 31% EBITDA margins § In Q4 2011 achieved EBITDA of $40M with $30M
Slide 6: Business and Strategy Overview
6 Business and Strategy Overview
Slide 7: The Big Question
7 The Big Question The world is going digital… correct? So why is TowerJazz focused on analog?
Slide 8: Market Leading Smart Phones
8 Market Leading Smart Phones
Slide 9: Apple iPhone4 - a Closer Look
9 Apple iPhone4 - a Closer Look Apps Processor + DRAM NAND Flash NOR Flash Quad Baseband Logic/Memory 4 Chips Power Audio Display Touch PA Switch Controller ESD Discretes Gyroscopes Compass Analog Many Chips
Slide 10: Analog Inside!
10 Analog Inside! Another example.. Deep digital is the brain.. BUT without analog: It won’t turn on Screen won’t display No wireless, among others…
Slide 11: The Answer
11 The Answer The world is going digital… correct? So why is TowerJazz focused on analog? Because the world is going digital BUT without analog it won’t work!
Slide 12: Emerging Microelectronics: Two Roads to Follow
12 Emerging microelectronics : Two Roads to Follow 350nm-130nm technology nodes Moderate investments ( tens of millions US $) + lots of Innovation and Creative Thinking Specialty products : More than Moore Specialized Image Sensors Specialty IC for mobile applications: Power Management Ics (drivers,
Slide 13: Specialty Foundry Enjoys Several Advantages
13 Capacity Capex High Low Technology Capex High Low Product Lifetime Short Long Customer Engagement Typically multi-source Sole or limited source Technology Differentiation At leading edge only Across process technologies Segment Sizes Large Many niches through mid-size Process Technologies CMOS Si
Slide 14: Annual Revenues 2005-2011
14 Annual Revenues 2005-2011
Slide 15: Foundry Revenue Landscape: Consistent superior performance
15 1. Source: IC Insights, Company reports, SemiMD January 2012 Foundry Revenue Landscape: Consistent superior performance
Slide 16: Specialty Foundry
16 Specialty Foundry CMOS SPECIALTY
Slide 17: Total 8" Equivalent Capacity of ~1.7M WPY
17 Total 8” Equivalent Capacity of ~1.7M WPY
Slide 18: HPA/RF
18 HPA/RF CMOS TOPS-IDM Corporate Business and Applications Power CIS
Slide 19: RF and HPA Applications and Technology
19 RF and HPA Applications and Technology RF CMOS and SiGe BiCMOS § Cell Phone, WiFi TxRx § Basestation, Specialty Wireless § TV, Satellite, STB Tuners RF and Tuners SOI Switch and SiGe Power Amplifiers § Power Amplifiers § Antenna Switch § PA Controllers § IPD Front-End Modules High Performance SiG
Slide 20: Multiple Drivers of Strong Long Term TAM Growth
$7.5 4 Gu (Tablets seo | & _ ° RA WLAN vy a 45 VA xe s were = Core Mobile F $3.0 Market $1.5 | $0.0 r 2010 2014 Multiple Drivers of Strong Long Term TAM Growth
Slide 21: Switch Market shift to SOI
21 Switch Market shift to SOI SOI Wafer Foundry Revenue TAM ($M) SOI TAM going from ~$30M in 2011 to ~$200M in 2014 Technology Split (%) Source: company analysis
Slide 22: Drivers of Demand: Front End Module
22 Hence - Gen+2 market leader development engagements. Drivers of Demand : Front End Module Market Trend • GaAs Switch => SOI technology • GaAs PA => SiGe PA for several applications • Silicon based IPD • PA controller advances but remain RFCMOS TowerJazz advantages • Long term customer relationshi
Slide 23: Power: Key Growth Markets
23 Power: Key Growth Markets § Voltage requirements vary by make and Model: Scalable 20 to 80V and low layer count are the primary advantage FPD DC/DC, LED Backlighting § 1.8V CMOS combined with the High voltage module provides the correct balance of performance and cost for medium currents Digital
Slide 24: Drivers of Demand: Power Electronics Market
24 Hence - Gen+2 market leader development engagements. TowerJazz can take market shares over all three segments Drivers of Demand : Power Electronics Market 20 Billion US $ today; Stable ~ 8% market growth rate Substantially higher foundry growth rate TowerJazz PM platforms advantages: • 180nm tech
Slide 25: Samsung Selects TowerJazz's 700V Power Technology
25 Samsung Selects TowerJazz’s “unrivaled” 700V Power Technology Platform for its Next Generation High Voltage Products Power Management IC Market Estimated at $14.6B in 2013 according to iSuppli Samsung Electro-Mechanics Vice President Dr. Jae Shin Lee and TowerJazz Chief Executive Officer, Mr. Rus
Slide 26: CIS Key Markets
26 CIS Key Markets § Highest requirements for image quality § Large sensors, very high resolution, demanding frame rate § Very low defect count allowed § Very high sensitivity, dynamic range & low noise Professional Photography § Market Leader for dental x-ray CMOS § Supplying all Tier-1 vendors § S
Slide 27: Drivers of Demand: CMOS Image Sensor Market
27 Hence - Gen+2 market leader development engagements. TowerJazz market focus is specialty CIS Drivers of Demand : CMOS Image Sensor Market 6 Billion US $ today; stable ~ 7-8% growth rate TowerJazz CIS advantages: • Ultra-low noise and dark current • Specialized solutions for high-end applications
Slide 28: From the smallest Sensor in the World to the Largest
From the smallest Sensor in the World to the Largest p> WZ
Slide 29: Jazz Semiconductor
29 Jazz Semiconductor Newport Beach, California, USA • Converted to 200mm wafers in 1994 • Expanded to 25K WPM in 2010 Geometries • 0.5um-0.13um Technologies: SiGe, BiCMOS, MS / RF Representative customers: Skyworks RFMD Entropic Marvell A&D US Employees : 650 • Fab 1 built in 1984 - running at full
Slide 30: Japan Acquisition
30 Japan Acquisition • Micron 3 years take-or-pay • Already gained business from multiple Japanese IDMs • Announced Japanese government grants for CapEx
Slide 31: India 300mm wafer fab decision
31 "Significant progress has been made in our talks with potential contenders.“ R. Chandrashekhar, secretary of India's Department of Information Technology. India 300mm wafer fab decision
Slide 32: India Government Sponsored 300mm Factory
32 India Government Sponsored 300mm Factory • Signed binding MOU with a leading Indian infrastructure conglomerate, to build and operate a 300mm facility in India. – Roadmap to long term 300mm wafer size, 90nm analog technology – Enables companion chips in deep submicron technologies (65-45nm) – Hig
Slide 33: Pursuit of Excellence
33 Pursuit of Excellence
Slide 34: Pursuit of Excellence
34 Pursuit of Excellence • We are going through every group in the company asking: 1. Define excellence in your group in 4-5 bullets 2. Present the top 3 initiatives to achieve it
Slide 35: Pursuit of Excellence
35 Pursuit of Excellence • We are going through every group in the company asking: 1. Define excellence in your group in 4-5 bullets 2. Present the top 3 initiatives to achieve it • There is a common theme for excellence - which boils down to 3 things: • Personal capability • Adequate work tools • P
Slide 36: Pursuit of Excellence: Mediocrity
36 Pursuit of Excellence Mediocrity
Slide 37: Pursuit of Excellence: Waste
37 Pursuit of Excellence Waste
Slide 38: Pursuit of Excellence: Frustration
38 Pursuit of Excellence Frustration
Slide 39: We are creating an environment with an impassioned employee base
39 We are creating an environment in which we have a worldwide impassioned employee base What excites our customers - impassions our employees - 1 st time success! Pursuit of Excellence • We are going through every group in the company asking: 1. Define excellence in your group in 4-5 bullets 2. Pre
Slide 40: Summary
40 Summary • We have been the #1 growth foundry over the past 5 years AND became the #1 specialty foundry by revenue in 2010 and expanded the lead in 2011. • We target to continue to lead the specialty market over the next years by 1. Growing specialized capabilities in sync with our customers immed
Slide 41: 2011 FY and Q4 Financials Results Overview
41 2011 FY and Q4 Financials Results Overview
Slide 42: Q4 & FY 2011 Financial Results Highlights
42 Revenue Profitability Balance Sheet Q4 & FY 2011 Financial Results Highlights § FY 2011: $611M , up 20% Y/Y vs. $509M in 2010 and up 2X vs. $299M in 2009 § Q4 2011: $175M , up 29% vs. $135M in Q4 2010 § EBITDA of $187M in FY 2011, a 31% EBITDA margins § In Q4 2011 achieved EBITDA of $40M with $30
Slide 43: TowerJazz Balance Sheets
43 Dec. 31, 2011 Dec. 31, 2010 CURRENT ASSETS Cash, short-term deposits & designated deposits Trade accounts receivable Other receivables Inventories Other current assets 101 75 5 69 16 198 68 5 43 8 Total Current Assets Long-term investments Property and equipment, net Intangible assets, Net Goodwi
Slide 44: Q4'11 Financial Statements (vs. Q3'11)
44 Q4’11 Financial Statements (vs. Q3’11) Fully detailed footnotes are available at the press release as filed on February 16, 2012 by the Company
Slide 45: Q4'11 Financial Statements footnotes
45 Fully detailed footnotes are available at the press release as filed on February 16, 2012 by the Company
Slide 46: We Know How to Create Value
46 We Know How to Create Value • Jazz Pre acquisition: § $15M/ year EBITDA, negative net profits • Jazz post acquisition: § $60-90M / year EBITDA run rate • Ebitda growth by 4X to 6X in 3 years • Added benefits: § New technologies and new customers from Tower to Jazz (e.g CIS) § New technologies and
Slide 47: TowerJazz Debt Summary
47 Security Type Linked to Outstanding principal ($M) Key Terms Wells Fargo Bank Credit Line $ 15 Bonds due 2015 $ 94 Security Type Linked to Series A+B+C 0 Series D Israeli price index 30 Series E Israeli price index 27 Principal is due Dec’ 2012; Convertible into ordinary shares until Dec’ 2012; l
Slide 48: Debt/ Balance Sheets Metrics
48 Debt/ Balance Sheets Metrics * These charts are based on an assumption that Ebitda in 2012 and on will be the same as 2011
Slide 49: Future Debt Payment
49 Future Debt Payment Assuming no conversion of any bond series
Slide 50: Future Debt Payment (conversion of all bond series)
50 Assuming conversion of all bond series Future Debt Payment
Slide 51: Future Debt Payment (conversion of all bond series)
51 Future Debt Payment Assuming conversion of all bond series
Slide 52: Past, Present, Future
52 Past, Present, Future
Slide 53: Past
53 Past • 2008 - major shift from digital 2 nd source to analog value add provider
Slide 54: Present
54 Present of premier 1 st tier customers (such as Samsung) creating greater than $100M cash from operations. • We now supply to the top market leaders in every one of our chosen business segments. • Nishiwaki factory, purchased with a sound business model, provides capacity for large customer growt
Slide 55: Future
55 We are the #1 Israeli Seller of Commercial Hi-Tech Hardware Future • Continue market growth within FEM, power management, high end image sensor, IDM transfer and JDPs and within specific MEMS opportunities. • Entrance into 300mm with the presented India deal or other such initiatives.
Slide 56: THANK YOU!!
56 THANK YOU!! WWW.TOWERJAZZ.COM
Slide 57: 57
57