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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM SD

Specialized Disclosure Report

TOWER SEMICONDUCTOR LTD.

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(Exact name of registrant as specified in its charter)

 

 

Nati Somekh

Telephone: +972-4-650-6109

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(Name and telephone number, including area code, of the person to contact in connection with this report.)

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

 

 

This Specialized Disclosure Report on Form SD (“Form SD”) of Tower Semiconductor Ltd. for the year ended December 31, 2020 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”). Unless the context indicates otherwise, “Tower,” “we,” “us” and “our” refers to Tower Semiconductor Ltd. and its consolidated subsidiaries as of December 31, 2020. The Rule was adopted by the Securities and Exchange Commission (the “SEC”) to implement reporting and disclosure requirements related to “conflict minerals” as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Conflict minerals are defined by the SEC as gold as well as columbite-tantalite (coltan), cassiterite, wolframite, or their derivatives, which are limited to tantalum, tin, and tungsten. The Rule imposes certain reporting obligations on SEC registrants whose products contain conflict minerals that are necessary for the functionality or production of their products (such minerals are referred to as “necessary conflict minerals”). For products which contain necessary conflict minerals, the registrant must conduct in good faith a reasonable country of origin inquiry ("RCOI") designed to determine whether any of the necessary conflict minerals originated in the Democratic Republic of the Congo (“DRC”) or an adjoining country, collectively defined as the “Covered Countries”. If, based on such RCOI , the registrant knows or has reason to believe that any of the necessary conflict minerals contained in its products originated or may have originated in a Covered Country and knows or has reason to believe that those necessary conflict minerals may not be solely from recycled or scrap sources, the registrant must conduct due diligence on the source and chain of custody of its conflict minerals in order to determine whether the necessary conflict minerals contained in those products did or did not directly or indirectly finance or benefit armed groups in the Covered Countries. Products which do not contain necessary conflict minerals that directly or indirectly finance or benefit armed groups in the Covered Countries are considered “DRC conflict free”.

 

We use the term “conflict free” in this Form SD in a broader sense to refer to suppliers, supply chains, smelters and refiners whose sources of conflict minerals did not or do not directly or indirectly finance or benefit armed groups in the Covered Countries.

 

The content of any website referred to in this Form SD is included for general information only and is not incorporated by reference into this document.

 

Company Overview

 

We are a pure-play independent specialty foundry dedicated to the manufacture  semiconductors. Typically, pure-play foundries do not offer products of their own, but focus on producing integrated circuits, or ICs, based on the design specifications of their customers. We manufacture ICs for our customers primarily based on third party designs. We currently offer the process manufacture of ICs with geometries of 0.35, 0.50, 0.55, 0.60, 0.80-micron and above on 150-mm wafers and 0.35, 0.18. 0.16, 0.13 and 0.11-micron on 200-mm wafers and 65 nanometer and 45 nanometer on 300-mm wafers. We also provide design support and complementary technical services. ICs manufactured by us are incorporated into a wide range of products in diverse markets, including consumer electronics, personal computers, communications, automotive, industrial  and medical device products.

 

We currently operate seven manufacturing facilities ("fabs") in several geographic regions: two fabs (for 150mm and 200mm wafers) located in Migdal Haemek, Israel, one fab (for 200mm wafers) located in Newport Beach, California, one fab (for 200mm wafers) located in San Antonio, Texas, and three additional fabs (for two 200mm and one 300mm wafers) located in the Hokuriku region of Japan. We offer state-of-the-art production lines for core bulk complementary metal oxide semiconductor (CMOS) and specialized technologies such as power management, CMOS Image Sensors (CIS), silicon-germanium bipolar CMOS (SiGe) and switch silicon-on-insulator (SOI) for radio frequency (RF) applications, high performance analog and micro-electromechanical systems (MEMS).

 

Overview of Tower’s Conflict Minerals Program

 

As a semiconductor manufacturer, we are knowledgeable of the materials needed for our production processes and products that we manufacture. To comply with the Rule, we reviewed the products we manufactured in 2020 to determine whether conflict minerals were necessary for their functionality or production. Based on this review, we determined that tungsten and/or tantalum were used in the manufacturing processes of most of our products and are contained in certain of our products.

 

Supply Chain Description

 

All of our integrated circuits are manufactured in our own fabs. Tower does not purchase any tungsten or tantalum directly from smelters, refiners or mines, and is many steps removed in the supply chain from the mining of these necessary conflict minerals. Rather, these necessary conflict minerals are obtained via our direct suppliers, who obtain them from sources worldwide. As a result, we rely on our direct suppliers to assist with our RCOI and due diligence efforts, including the identification of smelters and refiners for any necessary conflict minerals contained in the materials which our direct suppliers supply to us.

 

SECTION 1 - CONFLICT MINERALS DISCLOSURE

 

 

Description of Reasonable Country of Origin Inquiry ("RCOI") Efforts

 

As indicated, Tower concluded that during 2020 it had manufactured products in which tungsten and/or tantalum were necessary for their functionality or production. As a result, we conducted in good faith an RCOI that was designed to reasonably determine whether any of the necessary conflict minerals in our products originated in the Covered Countries or were from recycled or scrap sources.

 

As part of the RCOI, we conducted a supply chain survey of our direct suppliers of tungsten and tantalum (and of any material used in our manufacturing processes that contains tungsten or tantalum) to obtain country of origin information using the Conflict Minerals Reporting Template (the "Template” or “CMRT), which is a standardized survey tool published by the Responsible Minerals Initiative (“RMI”), formerly known as the Conflict-Free Sourcing Initiative (“CFSI”). RMI operates the Responsible Mineral Assurance Process (“RMAP”, previously the Conflict Free Smelter Program), a program that identifies smelters and refiners that produce responsibly sourced materials by using third-party auditors to independently verify that these smelters and refiners have systems in place to responsibly source minerals in conformance with RMAP standards. The Template, which requests direct suppliers to identify the smelters, refiners and countries of origin of the necessary conflict minerals they supply to Tower, was developed to facilitate disclosure and communication of information regarding smelters and refiners that provide material in a company’s supply chain. The Template includes among others questions regarding a company’s conflict-free policy, engagement with its direct suppliers, and a listing of the smelters the company and its suppliers use. In addition, the Template contains questions about the origin of conflict minerals included in their products, as well as supplier due diligence. Written instructions regarding use of the questionnaire are available on RMI’s website at http://www.responsiblemineralsinitiative.org/media/docs/CMRT%206.0%20Guide_final.pdf.

We received responses from all of our direct suppliers of tungsten and tantalum (and from all of our direct suppliers of any material used in our manufacturing processes that contains tungsten or tantalum). We then confirmed whether or not each smelter or refiner they identified as providing conflict minerals was found to be conformant with RMAP standards.

 

Conclusion Based on Reasonable Country of Origin Inquiry

 

As a result of our survey regarding 2020 activity, four out of our six direct suppliers of tungsten or any material used in our manufacturing processes that contains tungsten  indicated that they did not source from the Covered Countries. In addition, each of the six suppliers confirmed that all of the smelters or refiners they identified as suppliers of tungsten had been designated as compliant with RMAP standards.

 

Regarding tantalum, two out of our three direct suppliers of tantalum or any material used in our manufacturing processes that contains tantalum indicated that their supply chain includes smelters or refiners sourcing tantalum from the Covered Countries. In addition, each of the three suppliers confirmed that all of the smelters and refiners they identified as suppliers of tantalum had been designated as compliant with RMAP standards.

 

Because we know or have reason to believe that a certain amount of the tungsten and tantalum contained in certain of our products  originated or may have originated in a Covered Country, we conducted due diligence on the source and chain of custody of the tungsten and tantalum in our products. Our due diligence was designed to conform to the Organization for Economic Co-operation and Development’s “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas ", Third Edition (April 2016).

 

The due diligence measures that we performed are discussed further in the conflict minerals report filed as Exhibit 1.01 hereto.

 

Conflict Minerals Disclosure

 

This Form SD and the conflict minerals report, filed as Exhibit 1.01 hereto, are publicly available on our website at https://ir.towersemi.com/financial-information/sec-filings;

Item 1.02 Exhibits

 

The Conflict Minerals Report required by Item 1.01 of Form SD is filed as Exhibit 1.01 to this Form SD.

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

 

(i)

a Company code of ethics requiring all employees, officers and directors to comply with all of the laws, rules and regulations of the U.S., Israel and other countries, as applicable (available at: https://towersemi.com/about/corporate-social-responsibility-esg/social/;

(ii)

partnership since 2014 in the Responsible Business Alliance (RBA), which provides assessment tools including a self-assessment questionnaire which is designed to help members identify social, environmental and ethical risks in their supply chains and take action to put in place systems to further improve their social contribution,

(iii)

a code of ethics for suppliers requiring suppliers to conduct their business in an ethical manner and act with integrity, including by ensuring that products supplied to Tower do not contain metals derived from minerals or their derivatives originating from conflict regions that directly or indirectly finance or benefit armed groups,

(iv)

a conflict minerals policy as described below, and

(v)

a team of Company employees, consisting of senior operations, engineering, QA, regulatory compliance and legal personnel, that oversees implementation of the Company's conflict minerals compliance strategy. In addition, senior management of the Company, including the Senior Vice President Excellence and Quality and Reliability, VP of Procurement and the Senior Vice President, Chief Legal Officer and Corporate Secretary, are briefed on a regular basis by the Company’s Corporate Compliance Officer about conflict minerals compliance efforts.

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Avoids the use of conflict minerals that directly or indirectly finance or benefit armed groups in the Covered Countries;

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Expects its suppliers to have in place policies and due diligence procedures that will ensure that products and components that they supply containing conflict minerals, including conflict minerals from Covered Countries, are in fact "conflict-free", meaning that they do not directly or indirectly finance or benefit armed groups in Covered Countries;

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Reserves the right to take appropriate action to enforce its conflict minerals policy, including discontinuing purchases from suppliers that fail to comply; and

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Is committed to responsible sourcing of conflict minerals throughout its supply chain and to continued compliance with applicable SEC rules and regulations in this area.

Following an annual distribution of the Template to our direct suppliers of tungsten and/or tantalum or any material used in our manufacturing processes that contains tungsten and/or tantalum, we ensure to receive responses with completed CMRT from all of our suppliers.  Templates submitted by such direct suppliers are reviewed for reasonableness and for missing or incomplete data, and we contact such direct suppliers as necessary to obtain clarifications or additional information where needed.  Thereafter, we compare the smelters or refiners identified by those suppliers in their submitted Templates with the list of facilities designated by RMI as compliant with RMAP standards to ensure compliance.

 

As disclosed on our website and in our code of ethics for suppliers, our ethics helpline is available for suppliers to report any violations of the law or violations of our codes of ethics.