Tower Semiconductor CEO: Long-Term Supply Deals Here to Stay

Long-term supply agreements -- currently a “sign of the times” fad in the semiconductor industry as a hedge against insufficient fab capacity -- likely will “become more permanent” even after the current chip shortages abate, said Tower Semiconductor CEO Russell Ellwanger on a Q3 call Monday. LTSAs have been “catalyzed, maybe, by the present” chip crunch, “but I believe that it’s a model that really makes sense,” he said. “Capacity constraints from certain suppliers make everyone think, ‘Oh we have to address this differently,’ to ensure that in the long term we have business continuity,’ said the CEO. “I think that that’s good. Extremes put people more into a moderate median than if there were never an extreme.”