Chairman of "Tower": There is no benefit in keeping the factory in operation if this will create negative cash flow (Reuters)
Tower Company, the Israeli computer chip manufacturer, officially announced the closure of its Fab1 factory in the Migdal HaEmek area in northern Israel, according to the Israeli newspaper Yedioth Ahronoth.
The decision comes after a turbulent period following a failed takeover attempt by Intel in 2022 and subsequent regulatory hurdles.
Russell Ellwanger, Tower's CEO, explained the closure process during the publication of the company's 2023 financial reports, stressing the old nature of the "Fab 1" factory. “There is no point in keeping the plant running if it will create negative cash flow, and we decided to close it before it started to negatively impact our numbers,” Ellanger said, according to statements reported by the newspaper.
While the closure of Fab1 is expected to impact the region, Ellwanger confirmed that no employees will be laid off, and they are given the option of moving to the Fab2 factory or moving to one of the company's factories abroad. Tower currently employs about 1,500 workers in its two Israeli factories, making it one of the largest companies in northern Israel.
The CEO spoke about concerns about establishing a new factory in Israel, noting the lack of profitability due to limited support. Ellwanger compared the support provided by different countries, saying: “The United States provides a grant that covers 35% of startup costs, India provides a 75% grant, while Israel currently offers only a 9% grant.”
However, Ellwanger emphasized that Tower is exploring opportunities in India. Reports indicate that Tower is submitting an offer to establish a computer chip factory worth $8 billion in India, to take advantage of the growing electronics production market in the country, with the aim of reaching $300 billion by 2026.
Tower CEO: There are concerns about establishing a new factory in Israel (Getty)
The closure of the Israeli factory is in line with the global trend of moving chip factories out of China amid the intensifying trade war. As geopolitical influences continue to impact the industry, Tower is positioning itself to thrive in emerging markets such as India, which may reshape its trajectory after the setbacks of recent years.
The repercussions of the Israeli aggression on the Gaza Strip cast a dark shadow on the future of the Galilee region - which is controlled by Israel and located near the border with Lebanon - as a center for innovation, work and flexibility, according to what the Israeli technology investor, Ariel Margalit, wrote on the “Times of Israel” website. ".
As the war continues, the economic despair in the north increases. The loss is not limited to the financial aspect only, but with each passing month, the Galilee is losing about 10% of its population, according to the newspaper, quoting Margalit, who said that trade in the city faces a real threat to completely stop. Total.
Source: Yedioth Ahronoth