Tower Semiconductor: Israeli Fabless Represent Fifth of Our Revenues; Tower is Hosting the Second Israeli Fabless Conference.

MIGDAL HAEMEK, Israel -- Tower Semiconductor Ltd. (NASDAQ: TSEM)(TASE: TSEM) today announced that Israeli Fabless companies represent fifth of its revenues. Tower will host the Israeli Fabless conference on Wednesday, October 20, 2004 at the Daniel Hotel in Herzelia, Israel. Aimed towards strengthening the cooperation amongst Israeli fables companies, the conference is expected to host representatives from 40 companies.

Tower conducts extensive relations with the Israeli semiconductor industry and has further increased the number of local customers since the commencement of operation of its new fabrication facility, Fab 2. At the conference, Tower will present its capabilities and plans for 0.13-micron manufacturing, and offer networking opportunities and technical sessions of common interest to the members of the growing Israeli Fabless community. In addition, Tower will present its design to production advanced customer services, its wide IP offering and cooperation with the industry's leading vendors.

"We are pleased to host this conference for the second time and provide a forum for fruitful discussions among our customers, potential customers, strategic partners and providers of the semiconductor industry," said Carmel Vernia, chairman and chief executive officer of Tower. "Tower views its Israeli customers an important, strategic target and will continue to act towards strengthening the relations with the local industry, as well as providing them with the highest quality and service."

"Being the sole foundry in Israel, Tower has an important role in promoting the local semiconductor industry at the global market, by increasing the Israeli capabilities, development and offering, while reducing costs and time-to-market," said Ephie Koltin, Regional Marketing Manager in Tower. "In last year's conference we presented Tower's 0.18-micron manufacturing plans, and now we are proud to show success stories in 0.18-micron and production plans for our next technology generations."

For additional information and registration, please contact Iris Hirsch, Marcom Manager - Israel, at Tower, phone: [phone], e-mail: [e-mail]

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 0.13 micron; 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 micron 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 fully equipped, 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) the completion of the equipment installation, technology transfer and ramp-up of production in Fab 2, (ii) having sufficient funds to complete the Fab 2 project, (iii) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, (iv) operating our facilities at satisfactory utilization rates, (v) the affect that our expected decrease in sales in coming quarters will have on our ability to meet our covenants in our amended facility agreement, which we currently forecast we will not meet in the next several quarters, (vi) our ability to capitalize on increases in demand for foundry services, (vii) meeting the conditions to receive Israeli government grants and tax benefits approved for Fab 2 and 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, (viii) attracting additional customers, (ix) not receiving orders from our wafer partners and technology providers, (x) failing to maintain and develop our technology processes and services, (xi) competing effectively, (xii) our large amount of debt and our satisfying the covenants set forth in our amended facility agreement, and (xiii) achieving acceptable device yields, product performance and delivery times. 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 in our Form F-3, as amended, as were filed with the Securities and Exchange Commission and the Israel Securities Authority.