Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 48

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 48
---
 delays in the delivery thereof, we may face delays or a temporary halt in operations or other problems. If
we must purchase raw materials beyond our needs as required under committed vendor contracts, we may need to amortize or write such purchases
off, which may adversely impact our financial results. ”

32

RESEARCH AND DEVELOPMENT

Our future success depends, to a large degree, on our ability to
continue to successfully develop and introduce to production advanced process technologies that meet our customers’ needs. Our process
development strategy relies on CMOS process platforms that we either license and transfer from third parties or develop ourselves.

From time to time, at a customer’s request, we develop a
specialty process module, which in accordance with the applicable agreement, may be used exclusively for that customer or added to our
process offerings. Such developments are common across all of our specialty process technologies noted above.

Our research and development activities have related primarily
to our process, device and design development efforts in all specialty areas that were mentioned above, and have been sponsored and funded
by us and in certain cases with the partial participation of the Government of the State of Israel through the Israeli Innovation Authority
(the “ IIA”) (formerly, the Israeli Office of the Chief Scientist), pursuant to the Encouragement of Research, Development
and Technological Innovation in the Industry Law 5744-1984 (formerly known as the Encouragement of Industrial Research and Development
Law 5744-1984) (the “ Innovation Law”) and related regulations and guidelines. The terms of the IIA grants and the Innovation
Law impose significant restrictions on the transfer of the manufacturing of products developed with IIA support outside Israel (except
to the extent that the IIA approved grant program includes a pre-determined portion of manufacturing that may be performed outside Israel)
and on the transfer (including by way of license) of IIA-funded technologies to third parties outside Israel. For example, the transfer
of manufacturing or manufacturing rights of IIA funded products outside of Israel (except for the transfer of up to 10% of the manufacturing
capacity in the aggregate which requires only a notice to the IIA), requires the prior approval of the IIA, which approval, if received,
would generally result in the payment of increased royalties, up to three times the grant(s) amount, depending on the portion of
manufacturing performed outside of Israel, plus accrued interest, and the applicable royalty repayment rate could increase. In addition,
the transfer or license of I