Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 3

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 3
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 such as an electricity outage; difficulties in changing
or upgrading our process technologies; raw material shortages or impurities; delays in delivery or shortages of spare parts; and difficulties
in maintenance and upgrade of our equipment. Should such problems occur to a material degree, we may suffer loss of income, loss of reputation
and/or a loss of customers, any of which may adversely impact our business, revenues, financial results and financial condition.

2

Risks relating to the Fab 3 lease could harm
our business, operations and financial results.

NPB Co. operates our Fab 3 facility and its offices under a lease
contract that was initially in effect until March 2022 and included an option, at NPB Co.’s sole discretion, to extend the lease
for an additional five-year period, which NPB Co. exercised, extending the lease through March 2027. The landlord has made claims
that NPB Co.’s noise abatement efforts are not adequate under the terms of the amended lease, and has sought a judicial declaration
that NPB Co. has committed a material non-curable breach of the lease and that, in accordance with the terms of the amended lease, the
landlord would be entitled to terminate the lease. NPB Co. does not agree and is disputing these claims. In the absence of an agreement
to acquire the property or an extension of the lease agreement beyond March 2027, alternative solutions would need to be implemented to
meet customer demand for capacity at Fab 3, including through cross qualification of process technologies at our other fabs. To that end,
we would need to invest significant amounts to acquire process equipment tools to increase the capacity and capabilities in certain of
our other fabs, primarily Fab 2, Fab 7 and Fab 9, for certain technologies that are currently processed by Fab 3, such as SiGe and SiPho.
Failure to complete these activities on time may materially adversely impact our overall business, revenues and profitability, at least
until all such process equipment tools and technologies are installed and fully qualified for volume production at our other fabs.

Over-demand for our foundry services and/or
products may result in operational bottlenecks and a loss of customers and revenues, which may adversely affect our profitability and
business.

From time to time, in periods during which demand for our foundry
services exceeds our capacity and capabilities and we experience high utilization rates in certain of our facilities, we may (i) be unable
to fulfill customer demand in