Andrew Uerkwitz – Oppenheimer & Company Jay Srivatsa – Chardan Capital Markets Phelps Hoyt – Principal Global Investors Paul McWilliams – Next Inning Technology Research

Ladies and gentlemen, thank you for standing by. Welcome to the TowerJazz Fourth Quarter 2012 Results Conference Call. All participants are currently present in a listen-only mode. Following management’s prepared statements, instructions will be given for the question-and answer-session. (Operator Instructions) As a reminder, this conference is being recorded February 14, 2013. Joining us today are Mr. Russell Ellwanger, TowerJazz’s CEO; and Mr. Oren Shirazi, CFO. I’d now like to turn the conference over to Ms. Noit Levi, Director of Investor Relations and Public Communications. Ms. Levi, please go ahead?

Thank you, and welcome to TowerJazz financial results conference call for the fourth quarter and fiscal year 2012. Before we begin, I’d like to remind you that some statements made during this call may be forward-looking, and are subject to uncertainties and risk factors that could cause actual results to be different from those currently expected. These uncertainties and risk factors are fully disclosed in our Forms 20-F, F-4, F-3 and 6-K, filed with the Securities and Exchange Commission, as well as filings with the Israeli Securities Authority. They are also available on our website. TowerJazz assumes no obligation to update any such forward-looking statements. Now I’d like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead?

Thank you, Noit. Welcome to all of you to our fourth quarter and full-year 2012 results conference call. During today’s call, I’ll review our achievements during 2012, and some look ahead into 2013. Oren will then provide detailed summary for our fourth quarter and full-year 2012 financial results. Our revenues in 2012 grew by 5% over 2011, maintaining our position as the number one specialty foundry. In the immediate, going into Q1, we see a reduction in revenue as per the planned decreases in the Micron volume agreement in Nishiwaki. We see this as short-term. We bought the Nishiwaki factory due to the capacity requirements dictated by our multi-year customer demand plan. This demand is being realized and will be satisfied in the Nishiwaki factory, for example, the press released Vishay-Siliconix advanced technology transfer, an additional very large Asian based fabless existing customer transferring its highest volume flow to Nishiwaki and multiple new Japanese and Korean customer engagements. I’ll speak a bit later in more detail to the Nishiwaki factory. Last week, we were honored to present one of the keynote speeches at the prestigious Nikkei World Semiconductor Summit in Tokyo along with the Micron CEO, Global Foundry’s CEO and a few other companies including TSMC. Japan is waking up and all are taking note. However, we are solely positioned with the domestic pure-play foundry offering. I’ll share a portion of the message I shared there at this conference. After a brief introduction of our company, I began by speaking to three megatrends in the industry. These being, first, green energy; second, seamless connectivity; third, multifunction systems. Megatrend one, green everything, energy efficiency. Economic development throughout the world, economic development in Third World nations, the total demand for energy is far greater than supply. Battery technology is not at all…

Thank you, Russell, and hello, everyone. Reviewing our 2012 results from a financial point of view, we see some significant achievement as of the following: $164 million positive EBITDA for 2012, record revenue of $639 million for 2012, and EBITDA margin of 26% for the year. Our end of year cash balance which has increased by $32 million during 2012. Our current ratios, our debt-to-EBITDA ratios and all other financial ratios improved when compared to the ratios at the start of the year. We also improved our non-GAAP margins in 2012, with non-GAAP gross operating and net margins at 37%, 26% and 21%, respectively, for 2012 as compared to 36%, 25% and 20% in 2011. Non-GAAP gross operating and net profit increased to $233 million, $165 million and $131 million in 2012, respectively, as compared to $219 million, $155 million and $124 million in 2011. These improvements demonstrate the success of the efficiency actions we undertook in 2012 across the board, but particularly in Japan reducing the workforce in our Nishiwaki factory and improving our cost per layer and cost per wafer. We achieved $164 million EBITDA in 2012 and the EBITDA margin was 26%, which is stronger than $155 million in 2011. We ended the year with $133 million of cash balance as compared to $101 million at the start of the year. Achieving positive cash flow from operations for the year in the amount of $95 million, excluding $20 million one-time payment associated with the efficiency measures in Japan, including the reduction in force of 300 employees. I like to move into a more detailed balance sheet analysis. We increased our current assets net of current liabilities from $36 million as of the end of last year to $129 million, with a net-debt-to-EBITDA ratio of 2.4x. The current…

Thank you, Oren. Before we open up the call for the Q&A session, I would like now to add a general and legal statement to our results in regards to statements made and to be made during this call. Please note that the fourth quarter and fiscal of 2012 financial results have been prepared in accordance with the U.S. GAAP and the financial tables in today’s earnings release include financial information that may be considered non-GAAP financial measures under Regulation G and related reporting requirements as established by the Securities and Exchange Commission as they apply to our company. Namely, this release also presented financial data, which is reconciled as indicated by the footnotes below the table on a non-GAAP basis after deducting, one, depreciation and amortization; two, compensation expenses in respect to options grants; and three, finance expenses net, other than interest accrued such that non-GAAP financial expenses net includes only interest accrued during the recorded period. Non-GAAP financial measures should be evaluated in conjunction with and are not a substitute for GAAP financial measures. The tables also contains a comparable GAAP financial measure to the non-GAAP financial measures, as well as the reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. EBITDA is presented as defined in our quarterly financial release. EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA and the non-GAAP financial information presented herein should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, sales share data or other income or cash flow statements that are prepared in accordance with GAAP and is not necessarily consistent with the non-GAAP data presented in previous filings. I would like now to turn the call over to the operator. Operator?

Thank you. (Operator Instruction) The first question is from Andrew Uerkwitz of Oppenheimer. Please go ahead. Andrew Uerkwitz – Oppenheimer & Company: Hey. Thanks Russell and Oren. I appreciate your update there good and thorough. So a couple of quick questions here. How should we think about the – you mentioned on the call revenue should, earnings kind of tick up of this first quarter low, but can you give us an indication at what rate will get snapback will be gradual?

I don’t want to over commit or under commit. We’re very confident of Q2 over Q1 growth very, very confident of some substantial H2 over H1 growth. A snapback I don’t think it’ll snapback immediately to $170 million level will be some work to get back up there. But we’re certainly looking at – targeting a strong second half and propelling or propelled by the shares that we’ve won. And a lot of execution has to happen. The new entries that we have are very, very big volume potentials, but we have to execute for pristinely and quickly. The – reaching of $200 million revenue quarter I think is certainly on the horizon it’s not a question of it will happen, it’s a question of how quickly do we execute and do the customers execute in their market. That’s the interesting thing about a growth in market share. If you are growing market share with a customers themselves already have the market and everything is qualified in that market that happens quicker, if you are growing market share with customers themselves are getting into new markets that happens more slowly. Our growth is a combination of both, so some of it is very dependent upon us just really executing on all the qualifications and ramps, and other than relies on our customers executing on the final application. So hopefully that gives you some more color, I know it’s not a black and white answer but... Andrew Uerkwitz – Oppenheimer & Company: No, it’s very good. I appreciate that Russell. On the execution side on the expense side you guys have historically done a very good job of matching expenses with revenues. So as we see revenue growth return here, should we expect OpEx to the same and at about the same rates or you guys continue to have put a lid on that sort of thing and get some margin expansion along the way?

Hi, Andrew, it’s Oren. Yes, so OpEx meaning R&D, M&A, SG&A should be a flat I mean we reduced them, we did very good, very reasonable work. So the levels of Q4 should be flat there might be minor increase in the marketing side of the expenses because of some commissions which are resulting from increased revenue and apart from that it should be pretty flat. Andrew Uerkwitz – Oppenheimer & Company: Okay. And then, if I can ask just one last one quick here, on the balance sheet side you guys are doing a good job growing cash, what’s the level of cash you need to operate and then with any excess cash what are the plans there to do?

Well, I think I described the cash during the year basically if you check our last three years 2010, 2011 and 2012 we are around $100 million positive cash flow from operations. And the CapEx is around $80 million to $100 million. So we don’t really need cash to operate the business. So we have always positive operating – cash flow that even is enough to fund all the CapEx needs and leave us still some net cash flow. And now the only remaining item is of course the principal of debt or bond. So if you will look at 2012 we actually find a new credit line with GE that give us another credit line we also have the credit line from Wells Fargo. And looking forward, if you will look the coming two years are pretty much no bond principal payment above from a small Israeli shekel of $6 million a year. And the Wells Fargo and GE alone are also not during the coming period. So it’s only the Israeli bank which is this year $25 million. So if you’ll sum all the total of debt payable for 2013 principal its total of $31 million, $25 million bank and $6 million a smaller part of one of the bond. So $31 million and it’s even less than the credit line is available to us by the banks. So I think it’s the answer the question. Andrew Uerkwitz – Oppenheimer & Company: Yes I appreciate that. Thank you guys, appreciate it.

Thank you.

The next question is from Jay Srivatsa of Chardan Capital Markets. Please go ahead. Jay Srivatsa – Chardan Capital Markets: Thanks for taking my – hello.

Hi, Jay. Jay Srivatsa – Chardan Capital Markets: Yeah. Thanks for taking my question. Russell I want to get your view at a macro level in the semi market looks like tablets and smartphones have been doing well, but the rest of the market seems to be a little weak. As you look at fiscal 2013 what’s your general sense on overall market in semis and when do you see – when do you hope to see a nice recovery in that market?

That’s a very, very difficult question to try to answer. I – in reference to our specific business what we look at continually is to focus on growing market share. And if you grow market share then a bit independent of the market trend you can insure your self growth. I had mentioned last year in our Q4 – during Q4 went to the Q3 release, but one area that we had been seeing weakness was within one of the segments that we serve that we serve well and that is within the discrete and MOSFET. That market still appears to be somewhat weak. However, we are starting to see an up tick in the demand of our customers there. It’s not an up tick that the orders are coming in for Q1, but it’s an up tick that we’re seeing right now coming in for Q2. If you have basic units of MOSFETs and discreet that are going up I mean they’re very rarely the core of any system. They are needed building blocks in every system. So, the fact that we’re seeing that going up gives us a positive indication overall in the market, but really stronger than that I wish that I did have a stronger crystal ball but I don’t. I can certainly say that in the area of front end module the heart of our mobile platform communication and our growth within that is really a market share growth. It’s the movement of the PM switch into SOI switch the movement for certain applications of gas power amplifier to the SiGe power amplifier and there we see very, very strong potential and opportunities. Now this is already within the area that you said remain strong, but that’s an area that we see great strength because…

We typically see a seasonal decline in Q1, I mean that is something that, that is there, but the major impact of what we’re seeing is I wouldn’t again call it a drop off with micron business I would call it that forecasted supply agreement that we had. So there is no surprise in it and we didn’t buy the Nishiwaki factory for the sake of having Micron as a long-term customer. Micron is a good customer and the fact that we’ve been able to supply to them and truly we get excellent supplier report card from them, it’s a very good thing. There maybe other opportunities in the future that because of how well we’ve performed and having integrated the factory that they owned and supplying for them, maybe will help on some other activities in the future. But we did buy the factory for the sake of being able to meet our multiyear plan on customer demand. And as mentioned the advance platforms that have gone there from Vishay really didn’t need to go to Japan. The activity that we have with them are very, very well known and large fabless in Asia to move their highest technology, while it’s an existing customer of ours, but we could not have competed on this flow if we didn’t have the Japan facility. We just didn’t have this type of capacity to get us a guarantee at any of other factories over the long-term. So, I believe that as stated the purchase of the Nishiwaki factory was a very, very good event for the company. The decline presently that is just the reality it takes time to transfer it takes time post transfer to qualify the parts and for some instances it takes time after the parts are qualified for a customer to develop that market. Now if I look, I mentioned the fact of having really a very large automotive integrator and that we receive POs from that’s a type of business that really never goes away once you have it. But to get qualified on that you’re looking several years. So, all of that incremental business is built on top of doing these initial transfers. So yes, the biggest part of what we’re seeing is related to the agreement of volume reduction, but it was not unknown and it was not something that right now is outside of our plan. I think the factory has produced very well and has created good cash for us and it’s in a good position to continue to do well. Jay Srivatsa – Chardan Capital Markets: Can you help us understand the Micron agreement one more time, I mean do you expect the steady-state starting Q1 to be a lower than what it was previously or does it terminate at some point?

The agreement was – a pricing agreement based upon the trailing 12 month before we bought the factory plus some uplift in margin that for the first portion of time allowed us to be cash flow positive in and out itself. And then after 18 months was more or less a monotonic decrease for the next 18 months until three years. There is no agreement at all after three years or ever. Jay Srivatsa – Chardan Capital Markets: Okay.

Meaning, by agreement... Jay Srivatsa – Chardan Capital Markets: It’s not...

What I mean is a formal commitment to buy wafers per month. Jay Srivatsa – Chardan Capital Markets: Understood. You talked about Japan and some other the positive I things that you’re seeing there, can you help us understand when, what is your sense on when do you expect revenue contribution from Japan to start to become material for you as a company?

Within the second, third quarter. We mentioned that we have a major activity that’s ramping, starting to ramp this quarter. And it will be measurable within the second and third. And then come fourth quarter will be the, when we execute on it will be the start of the ramp of this very, very high volume transfer from an Asian customer so that’s by target that should, by target qualify in the middle to the end of the third quarter. I mean, qualify meaning complete call test not the flow being qualified, but the parts being qualified. So that should start ramping in the fourth quarter. And then there is other customers that are already in there I mentioned Citizen the quote from Citizen and I never stated nor do I still have approval to state what or how much or anything of the sort but Citizen is a big company and you have a floor that was developed in the factory for them. Jay Srivatsa – Chardan Capital Markets: All right. Last question, Oren, there was a request middle of the year by one of your large shareholders for a filing with SEC. Can you give us an update on where things are with those two large banks?

Yeah, there is actually no update in that front, what you said is correct that in May of this year we filed prospectus that they asked to register a portion of their note however, there is no update, they didn’t said anything of that, and there was no update. Jay Srivatsa – Chardan Capital Markets: Okay, thank you.

The next question is from Phelps Hoyt of Principal Global Investors. Please go ahead. Phelps Hoyt – Principal Global Investors : Well, thanks. I got a few questions, just hitting back on this guidance theme, it sort of seems like the market wasn’t really where kind of step function change in the demand, but if I’m looking back at your financials it seems like the last time you posted sub 120 sales was early in 2010. So, can you just give us any more color on business away from a Micron contract that’s off?

The color that I gave is pretty accurate and that is the fact of having the discrete and MOSFET business being down. That is very real and that’s a reasonable portion of our business. From the 2010 timeframe that you’re talking about we’ve really had to refresh during this period of time and rebuild a lot of our activities. In 2010, the biggest portion of business was of the RF transceivers. And that business has totally moved away the customer that we were supplying that to at that time. That was our biggest single customer. The customer that we were supplying to you at that time no longer makes RF transceivers. And so, that’s a many, many tens of millions of dollars of revenue that dropped out. So, the activities to replace that was really the different areas in the front end module and that’s what’s ramping presently. So, if you were to compare to the baseline in 2010 I think the core business has grown quite substantially if you compare it to core business in 2010. From 2010, we had non-wayfer business that was also fairly substantial. So… Phelps Hoyt – Principal Global Investors : Okay, all right. I appreciate the color. That’s good. Can you give us an estimate of cash usage in the first quarter?

I’m sorry one more time please? Phelps Hoyt – Principal Global Investors : Cash usage in the first quarter. Do you have any estimate you can give us? And you have healthy position there and you use some of the fourth quarter, which have an expectation for first quarter?

Yeah so, like mentioned before in the last three years the average per year is a generation of $100 million positive cash from operations after paying interest, which is more than the CapEx requirement. And Q1 should not be any different than that although the revenues are bit lower, but still we are collecting the customer collection from Q4 revenues. And in regards to bonds payment or bank payments we have nothing on Q1. So the cost but the only principal payments that I mentioned $31 million is total this is due of that $26 million in Q4 and $5 million is in Q3. So for Q1 there is nothing from that so pretty good environment. Phelps Hoyt – Principal Global Investors : Okay. And then last question, is there any information you can give us on the U.S sub Jazz technologies in terms of how they entered the year any general information you can provide?

Yeah sure. Jazz of course we’ll publish it separate financial very soon. We are filing voluntary and yeah Jazz ended the year with more than $40 million of cash on hand. Positive cash flow very nicely at more than $25 million, CapEx much lower than that. Wells Fargo credit lines $45 million of that we grew down approximately $20 million so still available. Overall, started the year with $19 million, ended the year with more than $40 million. So free cash flow net after everything grew $20 million net. So very good situation. And no maturities of bond or banks in next year. Phelps Hoyt – Principal Global Investors : Great, I appreciate it. Thank you.

The next question is from Paul McWilliams of Next Inning Technology Research. Please go ahead. Paul McWilliams – Next Inning Technology Research : Hi, guys, thank you for taking my call. On the Citizen deal, Citizen bought the micro display division from Micron so is that really just a transfer of business within Japan plant was doing for Micron in micro display?

It was a business that was developed at the Japan factory for micro display, but it is correct that was an activity that had been existing and was completed during the time of acquisition or since the time of acquisition. Paul McWilliams – Next Inning Technology Research : Okay. So is the new business coming in from Citizen in addition to what is transferring that was Micron business and is now Citizen?

So, I am not exactly sure as to the question, there was nothing being produced at the time of the acquisition, right. So it’s not that there was production that we’re shipping out of Nishiwaki to Citizen at that time. Paul McWilliams – Next Inning Technology Research : Okay. But what I am saying is Citizen bought the Micron product line and the Micron product line was been build in Nishiwaki prior to Citizen acquiring it, so now it just transfers from being a Micron piece of business to a Citizen piece of business or is there a new Citizen business in addition to what’s transferring by the acquisition?

I’m not trying to skirt your question at all Paul, I am a little bit lairy about saying too much about Citizen because I have a press release from them that’s all. But I can say that this business is all new business. Paul McWilliams – Next Inning Technology Research : Okay. And I won’t press on that. In your front end module business are you just doing the semiconductor content there in other words just doing the fabrication or are you doing something beyond fabrication of chip stacking, assembling test does it extend beyond fabrication?

It’s a very, very question what you’re asking. At this point, we are producing controllers, we’re producing silicon germanium power amplifiers and we’re producing SOI base switches. We do have activities right now to where we are sampling integrated passive devices and we are having activities where we are evaluating interposers. And presently everything that we do is selling wafer level on PAs and switches and controllers. We’re doing nothing of the packaging, we’re doing nothing on 3D stacking I think what you’re referring to or... Paul McWilliams – Next Inning Technology Research : Yes.

The reality presently is 2.5 gig and that we’re presently doing nothing. But we are having activities looking at interposers and the value that we could add in doing interposers. Paul McWilliams – Next Inning Technology Research : Very good. So the TSV is a technology that you developed with your partners that can be leveraged through the stacking?

The TSV is a critical component of the silicon germanium PA. Paul McWilliams – Next Inning Technology Research : Okay. got you.

Very good question Paul. Very good. Paul McWilliams – Next Inning Technology Research : Thank you. It sounds to me – you’ll have to excuse my voice, I am dealing with a flu today. It sounds to me and correct me if I am wrong or elaborate if there should be some elaborations here that possibly in the transition from the take or pay you had with Micron to refill behind them as it would logically be assumed they would be moving the capacity out that there maybe a bit more air gap than you anticipated sometime ago. Would that be an accurate way to view that?

I don’t think that there is an air gap as far as the amount of time we thought it would take us to qualify and fill customers with our technologies. I don’t believe so, if there is, it’s fairly small. And it’s possible that we had thought that they would be ordering above the minimal amount that was contractually committed and there were periods when that was the case. Paul McWilliams – Next Inning Technology Research : Okay. That was very understandable. Now help me understand and I know there is a lot of variables here, so I’m not trying to pin you down, I’m just trying to get a general feel and we could view as this as large Asian fabulous company as a example if you would like or you can speak more generically, but about when there is a time period from when you book a deal that is a transfer deal of an ongoing product line into a book to order before you start seeing revenue and I am not including here how long it takes a customer to get market share, we’re going to assume this is a deal where the customer

Who already has market? Paul McWilliams – Next Inning Technology Research: Market and flow?

In most cases, for the time to it, I’m not talking about the, what we would call, risk production which is customer placing orders before it’s fully qualified. Risk production will usually happen a quarter before the big volume orders come in, but sometimes risk production is fairly significant. If they see a very strong demand, then we’ll take the risk and put in big orders depending, say for example use a $1,000 HTOL. They’ll put in a risk order and ask you to complete the wafers when it reaches 500, things of that sort. But I think in our case, a very good rule of thumb is probably one year, not from the time that you start talking with the customer, but from the time that you actually start the work until you really start the production ramp. Paul McWilliams – Next Inning Technology Research: Okay, well, that’s about what I would have assumed, but I just wanted to get it from a guy that’s in the field. I’ve got one more question. This goes to a rumor that I read, well, it was boisterous being more than a rumor in the Israeli press that you’re negotiating with Micron is real to buy the old mnemonics fab, can you comment on that?

Of course not. Paul McWilliams – Next Inning Technology Research: I understand that, I had to ask. Thank you again for your time. I better give my voice a rest and let you go into the next one.

Thank you very much, Paul. That’s always fun. Thank you.

There are no further questions at this time. Mr. Ellwanger, would you like to make your concluding statement?

Certainly. So again, we really thank our customers for their trust in us as a long-term partner. The model that we have where by our mission statement to provide unique value really means that we are the sole supplier for most of the products that we make and that takes a lot of trust. We’re thrilled with that and we’re very, very happy that we continue to grow our market share and have earned our customers’ trust. Very thankful for our investors, their belief in our business model, belief in the management, our employees for their capability, dedication and passion which has driven us to be number one specialty foundry in the world and which we believe will continue to drive us. Look forward to continue to update you on progress over the coming quarters. And again, thank everyone for continued interest in our business. I wish you all a wonderful Valentine's Day. It’s now 6.30 p.m. here and I look forward to get home and celebrate with my sweetheart, my wife of 33 years. Thank you very much. Bye, bye.

Thank you. This concludes the TowerJazz fourth quarter 2012 results conference call. Thank you for your participation. You may go ahead and disconnect.