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Exhibit 4.8  



TOWER SEMICONDUCTOR
LTD.  

CHAIRMAN SHARE OPTION
PLAN 2006  



A PLAN UNDER SECTION
102 OF THE INCOME TAX ORDINANCE 



	1.  	Name
and Purpose: 






	 	1.1 	This
plan, as amended from time to time, shall be known as the Tower Semiconductor Ltd.
Chairman Share Option Plan 2006 (the "Plan"). 






	 	1.2 	The
purpose and intent of the Plan is to provide incentives to the Chairman of the Board of
Directors (the “Chairman”) of Tower Semiconductor Ltd. (the “Company”)
by providing him/her with options (“Options”) to purchase ordinary
shares (“Ordinary Shares”) of the Company, and was approved by the
Company’s Board of Directors (the “Board”). Options under this Plan
shall be granted pursuant to the provisions of Section 102 (“Section 102”)
of the Israeli Income Tax Ordinance (New Version), 1961 as amended from time to time, the
Law Amending the Income Tax Ordinance (Number 132) 2002 (as amended, the “Ordinance”)
and the rules promulgated thereunder (the “Rules”). 






	 	1.3 	The
Plan shall become effective upon its approval by the Board (the "Effective Date"). 






	2.  	Scope: 






	 	
The
total number of Options that may be granted under this Plan is 3,158,090 (three million
one hundred and fifty eight thousand and ninety), of which all may be granted as 102
Trustee Options (as defined below). Each Option shall be exercisable into one Ordinary
Share of the Company (nominal value NIS 1.00 per share) (the “Underlying
Share”). 






	3.  	Options
granted under Section 102: 






	 	
Options
granted pursuant to Section 102(b) shall be either (a) capital gains track options under
Section 102(b)(2), in which income resulting from the sale of Underlying Shares is taxed
as capital gain (“102 Capital Gains Track Options”), or (b) ordinary
income track options under Section 102(b)(1), in which income resulting from the sale of
Underlying Shares is taxed as ordinary income (“102 Ordinary Income Track
Options”; together with 102 Capital Gains Track Options, “102 Trustee
Options”). Pursuant to the Company’s election filed with the Israeli Income
Tax Authorities to issue 102 Capital Gains Track Options under the Company’s Employee
Share Option Plan 2003/1, the Company may currently grant only 102 Capital Gains Track
Options. The Company may change such election, following the approval of the Board, all in
accordance with the provisions of Section 102(g) of the Ordinance. 

















	4.  	Eligible
Grantees: 






	 	4.1. 	Options
may be granted to the Chairman of the Company (referred to as the                “Grantee”).
The grant of an Option to the Grantee hereunder                shall neither entitle such
Grantee to participate, nor disqualify him/her from                participating, in any
other grant of Options pursuant to this Plan or any other                share incentive
or share option plan of the Company. 






	5.  	Options: 






	 	5.1. 	102
Trustee Options may be granted from the later of (i) the Effective Date; or
               (ii) 30 (thirty) days from the filing of this Plan with the Israeli Income
Tax                Authorities in accordance with applicable law. 






	 	5.2. 	Options
may be granted until 10 (ten) years from the Effective Date. 






	 	5.3. 	Options
shall be granted by issuance of an Option letter to the Grantee stating,
               inter alia, the number of Underlying Shares, the dates when the Options
may be                exercised, the Option exercise price and such other terms and
conditions at the                discretion of the Board, provided that they are
consistent with this Plan and                with applicable law (the “Option
Letter”). The Option Letter                shall also list the date of grant of
the respective Options (the “Date                of Grant”). 






	 	5.4. 	The
Options will not be listed in any stock exchange and are not transferable
               (except to the Grantee’s legal heirs or estate). 






	 	5.5. 	The
Grantee shall have no right to vote or receive dividends (subject to Section
               11.1) or any other rights of a shareholder prior to his/her exercise of
the                Options and until the issuance of the share certificate evidencing the
               Underlying Shares. 






	6.  	Vesting
and Exercise of Options: 






	 	6.1. 	Options
shall vest and become exercisable as set forth in the Option Letter. 






	 	6.2. 	The
consideration to be paid for the Underlying Shares, including the method of
               payment, shall be determined by the Company and may consist entirely of
               (1) cash, (2) check (provided payment has cleared), or
               (3) cashless in the case of same day sale. The procedure for exercise
of                the Options shall be provided to each Grantee together with the Option
Letter.                The Company may change the procedures for exercise of the Options
at its                discretion, by giving notice thereof to the Grantee. 






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	 	6.3. 	If
any Option has not been exercised within ten (10) years after the Date of
               Grant (or any shorter period set forth in the Option Letter), such Option
shall                immediately terminate and all of the Grantee’s interests in and
rights to                such Option shall immediately expire. 






	7.  	Options’ Exercise
Price: 






The purchase price in $US of each
share will be the closing sales price of the Company’s shares as reported by NASDAQ
or the principal national securities exchange upon which the Company’s shares are
listed or traded on the last market trading day (the “Fair Market Value”)
prior to the initial date the Board approved the Option grant, unless otherwise determined
by the Board and set forth in the Option Letter. 



To avoid doubt, Options designated as
102 Capital Gains Track Options whose exercise price is less than the “102 Fair
Market Value”, shall be subject to Section 102(b)(3) of the Ordinance. 



“102 Fair Market
Value” shall mean with respect to 102 Capital Gains Track Options only, and for
the sole purpose of determining tax liability pursuant to Section 102(b)(3) of the
Ordinance, the average value of the Company’s shares on the thirty (30) trading days
preceding the date of grant. 



	8.  	Trustee;
Required Holding Periods: 






	 	8.1. 	All
Options and the Underlying Shares will be held in trust by David H. Schapiro
               Legal Services (the “Trustee”) (i) in accordance with
Section                102 and the regulations, rules, orders and procedures promulgated
thereunder                with respect to Israeli residents; or (ii) pursuant to the
Company’s                instructions and all applicable laws with respect to
non-Israeli residents (all                such Options shall be referred to as the “Trustee
Options”). 






	 	8.2. 	The
102 Trustee Options and the Underlying Shares shall be held by the Trustee
               for the requisite period prescribed by the Ordinance and the Rules, or
such                other period as may be required (the “Required Holding Period”)
               and the Grantee shall not be entitled to sell or otherwise dispose of the
               Underlying Shares purchasable upon the exercise of such 102 Trustee
Options                during the Required Holding Period, unless permissible and in
accordance with                the Ordinance and the Rules. 






	 	8.3. 	The
Trustee and Grantee shall comply with the applicable laws and the terms and
               conditions of the Trust Agreement entered into between the Company and the
               Trustee. 






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	 	8.4. 	In
the event that the Company issues securities as bonus shares                (maniyot hatava)
or performs a                share split or a similar dissolution, such bonus shares or
other similar rights                on shares which derive from 102 Trustee Options shall
be subject to the                provisions of this Section 8 and the Required Holding
Period for such bonus                shares or other similar rights shall be measured
from the commencement of the                Required Holding Period for the 102 Trustee
Options. All such bonus shares                and/or other similar rights shall be held
by the Trustee in accordance with                Section 102 and the regulations, rules,
orders and procedures promulgated                thereunder with respect to Israeli
residents. 






	 	8.5. 	The
Trustee shall not exercise the voting rights vested in the Underlying
               Shares, unless the Trustee believes, after consulting with the Company’s
               Compensation and Options Committee (or another committee given such
authority by                the Board, or in the absence of a committee, the Board) and
the Grantees who                hold a majority of the issued Options, that said rights
should be exercised for                the protection of the Grantees as a minority among
the Company’s                shareholders. 






	 	8.6. 	The
Company shall be entitled to replace the Trustee with another appointee from
               time to time and shall notify the Grantee of such replacement. 






	9.  	Reserved
Shares:






	 	9.1. 	The
Company has reserved 3,158,090 (three million one hundred and fifty eight
               thousand and ninety) authorized but unissued Ordinary Shares (nominal
value NIS                1.00 per share) for purposes of the Plan, subject to adjustments
as provided in                Section 11 below. If any Options granted under the Plan
terminate, expire or                otherwise cease to exist, they shall no longer be
available for grant under this                Plan. 






	 	9.2. 	The
Company will maintain a sufficient quantity of Ordinary Shares, NIS 1.00
               nominal value, in its registered capital and shall increase said quantity
as                appropriate to allow for the exercise of the Options under the Plan. 






	10.  	Termination
of Service: 






	 	
The
Option Letter will include provisions regarding the termination of the Grantee serving as
Chairman of the Board and the consequences of such termination on the Grantee’s right
to exercise Options. 






	11.  	Adjustments: 






	 	11.1. 	In
the event that the Company shall issue any of its Ordinary Shares or other
               securities as bonus shares (maniyot hatava),
each Grantee who has been granted Options as of                such date shall, upon
exercising his/her Options that have been granted Options                as of such date,
be entitled to receive, for the purchase price payable upon                such exercise,
bonus shares at no additional cost, in an amount and of such                class, as the
Grantee would have received had he been the holder of the                Underlying
Shares at the time the Company issued such bonus shares. No                fractional
shares will be issued under this Section. The Company may aggregate                and
sell all fractional shares and will be entitled to the proceeds of the sale
               thereof. 






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	 	11.2. 	If
securities of any kind are offered to the Company’s shareholders by
               means of a rights offering, the exercise price of the Options will not be
               adjusted, however, the number of Underlying Shares will be increased to
take                into account the element of economic benefit of the rights issue
               (“markiv hahatava”),
as is represented by the ratio                between the price per share of the Company’s
Ordinary Shares on the                effective date of the future rights offering and
the base price per share of the                Company’s Ordinary Shares that is
established by the Tel-Aviv Stock                Exchange (the “TASE”)
on the following trading day. If the TASE                does not establish a base price
per share of the Company’s Ordinary Shares,                no adjustment in the
number of Underlying Shares issuable upon exercise of the                Options will be
made with respect to such future rights offering. 






	 	11.3. 	If
the Company consolidates its Ordinary Shares, NIS 1.00 nominal value, into
               shares with a higher nominal value, or if it splits them into a larger
number of                shares having a lower nominal value, the number of Underlying
Shares issued upon                exercise of the Options will be adjusted as
appropriate. 






	 	11.4. 	In
the event that the Company is a party to any agreement or arrangement in
               which the holders of the Company’s ordinary shares are offered the
               opportunity to exchange their shares for the securities of any other
               corporation, such as a merger or reorganization (the “Exchange Transaction”),
the Company will endeavor to cause such other                corporation to issue such
securities as those offered to the Company’s                ordinary shareholders to
any Grantee who exercises his/her Options, as if said                Grantee was the
holder of the Underlying Shares on the determining date in                connection with
the Exchange Transaction. 






	 	11.5. 	Voluntary
Liquidation: In the event of a decision to voluntarily                liquidate the
Company, each Grantee will be (i) deemed to have exercised his/her                vested
and exercisable Options immediately prior to such decision; and (ii)
               entitled to payment equal to the amount that he/she would receive in
liquidation                if he/she were a holder of the Underlying Shares immediately
prior to the                decision to voluntarily liquidate less the exercise price. 






	 	11.6. 	The
Board, or a committee thereof given such authority by the Board, is
               authorized to implement all adjustments and execute the required
calculations,                pursuant to the principles in this Section 11. 

















	12.  	Continuation
of Service:






	 	
Neither
the Plan nor the Option Letter shall impose any obligation on the Company to continue
receiving services from any Grantee. 






	13.  	Application
of Funds: 






	 	
The
proceeds received by the Company from the sale of Underlying Shares will be used for
general corporate purposes of the Company or any subsidiary thereof. 






	14.  	Tax
Consequences: 






	 	14.1. 	Any
tax consequences arising from (i) the grant or exercise of any Option, (ii)
               the issuance of Underlying Shares and payment therefor, (iii) the sale,
transfer                or exchange of Underlying Shares, or (iv) any other event or act
of the Company                or the Grantee hereunder, and any commissions and other
expenses related                thereto, shall be borne solely by the Grantee. The
Company, any of its                Subsidiaries and/or the Trustee may withhold any
taxes, expenses and commissions                as required. The Grantee agrees to
indemnify the Company, any of its                Subsidiaries and/or the Trustee and hold
them harmless from and against any and                all liability for any such tax
consequences, commissions, expenses or interest                or penalty thereon,
including without limitation, liabilities relating to the                necessity to
withhold, or to have withheld, any such tax from any payment made                to the
Grantee. 






	 	14.2. 	The
Grantee will confirm in writing that he/she (1) understands that the Options
               are granted pursuant to the Plan under Section 102 and the Code, as
applicable,                (2) is aware of the taxation track that applies thereto, and
(3) undertakes not                to exercise the Options prior to the end of the
Required Holding Period, unless                otherwise permitted. 






	15.  	Administration: 






	 	15.1. 	The
Plan will be administered by the Board, or, at the Board’s discretion,
               a committee thereof, subject to applicable law. 






	 	15.2. 	No
member of the Board or a committee thereof shall be liable for any action or
               determination made in good faith with respect to the Plan or any Option
granted                hereunder. 






	16.  	Amendment
and Termination of the Plan: 






	 	
Subject
to applicable law, the Board may, at any time, terminate or amend the Plan in any
respect.  






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	17.  	Governing
Law: 






	 	
The
Plan and all instruments issued hereunder in connection with Options granted pursuant to
Section 102 shall be governed by, and interpreted in accordance with, the laws of the
State of Israel. 






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