Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 146

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 4
Chunk 146
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, the wafers are transferred to assembly and test facilities. During the assembly process, each wafer is cut into dies, or individual semiconductors, and tested. Defective dies are discarded, while good dies are packaged and assembled. Assembly protects the product, facilitates its integration into the target systems, and enables heat dissipation. Following assembly, the functionality, voltage, current and timing of each product are tested. After testing, the completed product is shipped either to our customer or to their customer’s printed circuit board manufacturing facility. Our customers often use third-party service providers for the performance of wafer assembly and testing, and to a smaller extent, part of such process may be performed independently by us.
RAW MATERIALS
 
Our processes utilize various raw materials, including silicon wafers, chemicals, gases, and different types of metal targets. Although most of our raw materials are available from multiple suppliers, certain materials are purchased from sole-sourced vendors. Our raw material procurement policy is to select only those vendors who have demonstrated quality control and reliable delivery times, and to maintain multiple sources for each raw material whenever feasible in order that a quality or delivery issue with any one vendor will not adversely affect our operations. We may establish long-term supply agreements with our vendors where necessary or beneficial to Tower.
 
Our general inventory policy is to maintain sufficient stock of each principal raw material to meet operational needs and rolling forecasts of near-term customer requirements. In addition, we have agreements with some material suppliers under which they reserve certain levels of inventory in their warehouses for our use. We typically work with our vendors to plan our raw material requirements on a monthly basis, with pricing generally set on an annual basis. The actual purchase price is generally determined based on prevailing market conditions. Although we have not experienced any shortage of raw materials that had a material effect on our operations, and current supplies of raw materials we use are adequate, shortages could occur in various critical materials due to supply interruptions or increased industry demand.
 
The most important raw material we use is the silicon wafer, which is our basic raw material. We have historically obtained and believe that we will continue to be able to obtain a sufficient supply of silicon wafers. We believe that we have close working relationships with our wafer suppliers, and based on these long-term relationships, we believe that these major suppliers will make their best efforts to meet our demand.
 
In addition, certain materials are purchased from sole-sourced vendors under pre-committed volume contracts for specified pre-defined quantities that must be purchased on