TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     (dollars in thousands, except share data and per share data)



                               Nine months ended   Three months ended
                                 September 30,        September 30,
                              -------------------- -------------------

                                2006      2005       2006      2005
                              --------- ---------- --------- ---------

REVENUES
    Sales                     $131,933  $  62,928  $ 51,503  $ 20,553
    Revenues related to a
     joint development
     agreement                      --      8,000        --        --
                               --------  ---------  --------  --------
                               131,933     70,928    51,503    20,553

COST OF SALES                  194,666    179,598    68,244    57,130
                               --------  ---------  --------  --------

     GROSS LOSS                (62,733)  (108,670)  (16,741)  (36,577)
                               --------  ---------  --------  --------

OPERATING COSTS AND EXPENSES

    Research and development    11,107     12,849     4,179     4,200
    Marketing, general and
     administrative             18,106     13,481     7,308     4,715
                               --------  ---------  --------  --------

                                29,213     26,330    11,487     8,915
                               --------  ---------  --------  --------

                               --------  ---------  --------  --------

     OPERATING LOSS            (91,946)  (135,000)  (28,228)  (45,492)

FINANCING EXPENSE, NET         (37,957)   (25,428)  (12,382)   (9,900)

GAIN ON DEBT RESTRUCTURING      80,071         --    80,071        --

OTHER INCOME, NET                  597      2,518         6        42
                               --------  ---------  --------  --------

         INCOME (LOSS) FOR THE
          PERIOD              $(49,235) $(157,910) $ 39,467  $(55,350)
                               ========  =========  ========  ========






BASIC EARNING (LOSS) PER
 ORDINARY SHARE

     Earning (loss) per share
      (a)                     $  (0.63) $   (2.39) $   0.46  $  (0.83)
                               ========  =========  ========  ========

    Income (loss) used to
     compute basic earning
     (loss) per share          (49,235)  (157,910)   39,467   (55,350)
                               ========  =========  ========  ========

    Weighted average number of
     ordinary shares
     outstanding - in
     thousands                  78,607     66,190    85,087    66,671
                               ========  =========  ========  ========





DILUTED EARNING (LOSS) PER
 ORDINARY SHARE

     Earning (loss) per share
      (a)                     $  (0.63) $   (2.39) $   0.30  $  (0.83)
                               ========  =========  ========  ========

    Income (loss) used to
     compute diluted earning
     (loss) per share          (49,235)  (157,910)   41,433   (55,350)
                               ========  =========  ========  ========

    Weighted average number of
     ordinary shares
     outstanding - in
     thousands                  78,607     66,190   139,214    66,671
                                                          ========    =========    ========    ========



(a)  Basic  and  diluted  loss  per  share  in  accordance  with  U.S.  GAAP  for
          the  nine  and  three  months  periods  ended  September  30,  2006  are
          $1.67  and  $0.52,  respectively,  and  are  the  same  as  the  Isr.  GAAP
          data  for  the  nine  and  three  months  periods  ended  September  30,
          2005.