Tower Semiconductor Ltd., a leading Semiconductor specialized foundry in Israel, and DSP Group, Inc. the leader in the development and licensing of high-performance, low-power, digital-signal-processor (DSP) cores, today announced that Tower Semiconduct

MIGDAL HA'EMEK, Israel, SANTA CLARA, Calif., January 2, 2002 -
Tower Semiconductor Ltd., a leading Semiconductor specialized foundry in
Israel, (Nasdaq: TSEM; TASE: TOWER) and DSP Group, Inc. (Nasdaq: DSPG) the
leader in the development and licensing of high-performance, low-power,
digital-signal-processor (DSP) cores, today announced that Tower
Semiconductor has licensed DSP Group's Teak® DSP Core.

"This agreement significantly expands our Semiconductor Intellectual
Property (SIP) offering in Fab 2. Customers for our state-of-the-art 0.18
micron Industry Standard process technology will be provided with a fully
ported, silicon validated Teak core," said Mr. Ishai Nachumovsky, Tower's
Senior Director of Foundry Technologies. "The agreement will play a major
role in enhancing Tower's LSI offerings in applications where
high-performance signal processing is required, and provide Tower's
customers with a competitive edge, shorter design cycle, and easy
integration of a leading DSP core into their Systems-on-a-Chip (SoC)
designs" he added.

"We are very pleased with Tower's choice to offer our technology to its
customers for their designs and consider it a vote of confidence for our
advanced DSP technology." said Mr. Issachar Ohana, VP Sales of DSP Group's
Technology Licensing Division. "We believe that the unique combination of
high performance, low-power dual-MAC architecture with Tower's high-end
process will offer great benefits to the two companies' customers" he

Teak DSP Core, SmartCores™ family fourth generation core, is a
high-performance, 16-bit fixed-point DSP core using a Dual-MAC
(multiply-accumulate) architecture that enables a peak performance of 420
MIPS. Teak has a parallel instruction capability and performs high-speed
interrupts and fast context switching. It also includes an extended
program addressing space and parallel instructions that accelerate the
performance of various DSP algorithms. Teak is known for its code
compactness, and has excellent program memory utilization that reduces the
die cost. Teak also has special proprietary mechanisms designed to reduce
power consumption and other micro-architecture modifications. Teak was
designed for use in DSP-based ASICs, is fully code-compatible with DSP
Group's OakDSPCore® and TeakLite® and offers a natural migration path for
designs made using previous generation cores, but which require a higher
level of performance.

This core complements Tower's portfolio of building blocks for
implementation of high-end processing, imaging, storage and multimedia
applications: embedded flash and EPROM blocks, embedded CMOS Image
Sensors, Mixed Signal capabilities, a variety of compiled ROM and SRAM
options and comprehensive standard cell and I/O libraries.

About Tower Semiconductor and its New Fab

Tower Semiconductor Ltd. is an independent wafer manufacturer,
strategically focused on advanced Flash memory and CMOS Image Sensor
technologies. Tower provides manufacturing and turnkey services for
integrated circuits (IC) on silicon wafers in geometries from 1.0 to 0.35
micron, using its advanced technological capabilities and the proprietary
designs of its customers. For additional information regarding Tower,
please visit

Tower is now building an advanced Fab facility adjacent to its current
facility in Migdal Haemek, Israel. When completed, the new fab, referred
to as "Fab 2", will employ approximately 1,000 employees and produce up to
33,000 200-mm wafers per month in geometries of 0.18 micron and below,
using advanced CMOS technology from Toshiba.

About DSP Group, Inc.

DSP Group, Inc., is a global leader in the development and licensing of
high-performance, cost-effective, licensable DSP cores. The company's
family of DSP cores provides ideal solutions for low-power, cost-effective
applications, such as cellular, broadband communications, VoIP,
multimedia, advanced telecommunications systems, disk-drive controllers,
and other types of embedded-control applications. By combining its DSP
core technologies with its proprietary, advanced speech-processing
algorithms, DSP Group also delivers a wide range of enabling,
application-specific integrated circuits for full-featured,
integrated-telephony products and applications, including spread spectrum
wireless technologies. DSP Group maintains an international presence with
offices located around the globe. More information about DSP Group is
available from its Web site at

Tower 's Safe Harbor

This press release includes forward-looking statements, which are
subject to risks and uncertainties. Actual results may vary from those
projected or implied by such forward-looking statements. Potential risks
and uncertainties include, without limitation, risks and uncertainties
associated with (i) the satisfaction of the conditions under the
agreements with the Fab 2 equity and wafer partners, the Israeli
Investment Center and Tower's banks, (ii) obtaining additional financing
for the Fab 2 project from equity and/or wafer partners, (iii) completing
the construction of a new wafer manufacturing facility, (iv) conditions in
the market for foundry manufacturing services and in the market for
semiconductor products generally, (v) the successful completion of the
development and/or transfer of advanced CMOS process technologies to be
utilized in Tower's existing facility and in Fab 2, (vi) obtaining
additional business from new and existing customers, (vii) market
acceptance and competitiveness of the products to be manufactured by Tower
for customers using these technologies and (viii) the ramp-up of
production at Fab 2. A more complete discussion of certain risks and
uncertainties that may affect the accuracy of these statements, and
Tower's business generally, is included at "Item 3. Key Information--Risk
Factors" in Tower's most recent Annual Report on Form 20-F and under the
caption "Safe Harbor" in Tower's October 31, 2001 third quarter earnings
press release included in Tower's report on Form 6-K for the month of
October 2001, as filed with the Securities and Exchange
This press release and prior Tower press releases are
available at

DSP Group's Safe Harbor

This press release contains statements that qualify as
"forward-looking statements" under the Private Securities Litigation
Reform Act of 1995, including statements made by Mr. Ohana about the
Company's high-performance Teak DSP Core, the advantages that the Teak DSP
Core provides to the Company's existing and potential customers, the
success of the licensing arrangement with Tower. These forward-looking
statements are based on current expectations and the Company assumes no
obligation to update this information. In addition, the events described
in these forward-looking statements may not actually arise. The Company's
expectations and perceptions about the Teak DSP Core, the advantages that
the Teak DSP Core provides and the licensing arrangement with Tower could
differ materially from those described in this press release as a result
of various factors, including, the ultimate compatibility of Teak DSP Core
technology and Teak DSP Core with technologies and needs of Tower, market
acceptance by the Company's existing and potential customers, the timing
of product deliveries, the Company's ability to further develop and
enhance the Teak DSP Core to differentiate it from the Company's
competitors at cost-effective prices and in a timely manner, the
introduction of competing products and technology and the general market
demand for products that incorporate the Company's DSP technology. For a
further discussion of such factors, see the information provided under the
heading "Factors Affecting Future Operating Results" in our quarterly
report on Form 10-Q for the quarter ended September 30, 2001, which was
filed with the Securities and Exchange Commission on November 13, 2001 and
is also available on our Web site ( under Investor

Teak, TeakLite, OakDSPCore and SmartCores are trademarks or registered
trademarks of DSP Group, Inc. Other brands and products referenced herein
are the trademarks or registered trademarks of their respective