EXHIBIT 99.2

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

                       CONDITION AND RESULTS OF OPERATIONS

THE INFORMATION CONTAINED IN THIS SECTION SHOULD BE READ IN CONJUNCTION WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND RELATED NOTES FOR
THE YEAR THEN ENDED. OUR FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN UNITED STATES ("US GAAP").

TRANSITION TO U.S. GAAP

Beginning fourth quarter of 2007, the Company elected to present its financial
statements in accordance with U.S. GAAP. The Company elected to use U.S. GAAP to
increase transparency and comparability of the Company's financial reports and
facilitate research and analysis by shareholders, analysts and other
participants in the U.S. capital markets.

Commencing January 1, 2008 Israeli GAAP is no longer an alternative and can not
be used by public companies. Israel Accounting Standard 29 stipulates that
Israeli public companies that previously reported their financial results based
on Israeli GAAP must begin to report their financial results in accordance with
International Financial Reporting Standards, or IFRS, for periods beginning on
or after January 1, 2008. However, Israeli public companies that are listed in
the U.S. may elect to report using either U.S. GAAP or IFRS. We decided on the
change prior to the required deadline due to the importance of the year-end
reporting and our belief that this would be the best transition point.

The Company recasted the comparative amounts included in its financial
statements and in this report to US GAAP. In prior years the Company prepared
its financial reports in accordance with generally accepted accounting
principles in Israel ("IL GAAP") and provided reconciliation to US GAAP in the
notes to the financial statements.

RESULTS OF OPERATIONS

     The following table sets forth certain statement of operations data as a
percentage of total revenues for the periods indicated.

                                           YEAR ENDED DECEMBER 31,
                                             -------------------
                                              2007          2006
                                             -----         -----

STATEMENT OF OPERATIONS DATA:
Total revenues                                 100%          100%
Cost of total revenues                       123.4         142.7
                                             -----         -----
Gross loss                                   (23.4)        (42.7)


Research and development expenses, net         6.0           8.0
Marketing, general and administrative
expenses                                      13.7          13.8
                                             -----         -----
Operating loss                               (43.0)        (64.5)
Financing expense, net                       (15.2)        (25.4)
Other income, net                              0.0           0.3
                                             -----         -----
Loss                                         (58.1)%       (89.6)%
                                             =====         =====

YEAR ENDED DECEMBER 31, 2007 COMPARED TO YEAR ENDED DECEMBER 31, 2006

     REVENUES. Revenues for the year ended December 31, 2007 increased by 23.2%
to $230.9 million from $187.4 million for the year ended December 31, 2006. This
$43.4 million increase was mainly attributable to a higher volume of wafer
shipments.

     COST OF TOTAL SALES. Cost of total sales for the year ended December 31,
2007 amounted to $284.8 million, compared with $267.5 million for the year ended
December 31, 2006. This increase of 6.4% in cost of sales, which is relatively
low in relation to the 23.2% increase in sales, was mainly achieved due to the
Company's cost structure, according to which the Company has reasonable margins
for each incremental dollar of revenue and a reduction in depreciation and
amortization expenses, as described below. During the second quarter of 2007,
the Company reassessed the estimated useful lives of its machinery and equipment
and as a result, with effect from April 1, 2007, the Company's machinery and
equipment is to be depreciated over estimated useful lives of 7 years rather
than 5 years prior to such date. The change reflects the Company's best estimate
of the useful lives of its machinery and equipment and is based on experience
accumulated from Fab 1 and recent trends in industry practices. The Company
believes that the change better reflects the economics associated with the
ownership of the equipment. This change has been accounted for as a change in
estimate and is applied prospectively. Total depreciation and amortization
expenses included in Cost of Total Sales was approximately $137 million for the
year ended December 31, 2007, as compared to approximately $155 million for the
year ended December 31, 2006. Said reduction was mainly attributed to the
aforementioned change.

     GROSS LOSS. Gross loss for the year ended December 31, 2007 was $53.9
million compared to a gross loss of $80.1 million for the year ended December
31, 2006. The decrease in gross loss was mainly attributable to the 23% increase
in sales as compared to a 6% increase in Cost of Total Sales as described above.

     RESEARCH AND DEVELOPMENT. Research and development expenses for the year
ended December 31, 2007 decreased to $13.8 million from $15.0 million for the
year ended December 31, 2006.

     MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES. Marketing, general and
administrative expenses for the year ended December 31, 2007 increased to $31.6
million from $25.8 million for the year ended December 31, 2006. The increase is
primarily due to stock based compensation expenses and increased expenses
deriving directly from the higher revenues mentioned above.

     OPERATING LOSS. Operating loss for the year ended December 31, 2007 was
$99.3 million, compared to $121.0 million for the year ended December 31, 2006.
The decrease in the operating loss is attributable mainly to the decrease in the
gross loss described above.

     FINANCING EXPENSES, NET. Financing expenses, net for the year ended
December 31, 2007 were $35.0 million compared to financing expenses, net of
$47.6 million for the year ended December 31, 2006. This decrease is mainly due
to the consummation of the debt restructuring with our banks which was closed in
the third quarter of 2006, pursuant to which, approximately 30% of our then
outstanding loans were converted into capital notes and the interest rate
applicable to the interest payments was reduced from the three month LIBOR rate
plus 2.5% to the three month LIBOR rate plus 1.1%.

     OTHER INCOME, NET. Other income, net, for the year ended December 31, 2007
was $0.09 million compared to $0.6 million for the year ended December 31, 2006.

     LOSS. Loss for the year ended December 31, 2007 was $134.2 million,
compared to $167.9 million for the year ended December 31, 2006. This decrease
is primarily attributable to the decrease of $21.6 million in the operating loss
and to the $12.6 million decrease in financing expenses described above.

IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS

     The dollar cost of our operations in Israel is influenced by the timing of
any change in the rate of inflation in Israel and the extent to which such
change is not offset by the change in valuation of the NIS in relation to the
dollar. During the year ended December 31, 2007, the exchange rate of the dollar
in relation to the NIS decreased by 9.0%, and the Israeli Consumer Price Index,
or CPI, increased by 3.4% (during the year ended December 31, 2006 there was a
decrease of 8.2% in the exchange rate of the dollar in relation to the NIS and a
decrease of 0.1% in the CPI).

     We believe that the rate of inflation in Israel has not had a material
effect on our business to date. However, our dollar costs will increase if
inflation in Israel exceeds the devaluation of the NIS against the dollar, or if
the timing of such devaluation lags behind inflation in Israel.

     Almost all of the cash generated from our operations and from our financing
and investing activities is denominated in U.S. dollars and NIS. Our expenses
and costs are denominated in NIS, U.S. dollars, Japanese Yen and Euros. We are,
therefore, exposed to the risk of currency exchange rate fluctuations. The
recent devaluation of the US dollar in relation to the NIS increased mainly our
dollar expenses related to our NIS denominated debentures and the dollar amount
of our NIS denominated expenses.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2007, we had an aggregate of $44.5 million in cash and
cash equivalents. This compares to $40.9 million we had as of December 31, 2006
in cash, cash equivalents, and short-term interest-bearing deposits.

     During the year ended December 31, 2007, we raised $77.2 million in net
proceeds from the issuance of debentures, ordinary shares and warrants, $28
million as long-term loans, $1.7 million from Investment Center grants and
generated a net amount of $16.7 million from our operating activities. These
liquidity resources financed the capital expenditure investments we made during
the year ended December 31, 2007, which aggregated $109.0 million, mainly in
connection with the purchase and installation of equipment and other assets for
the ramp up of Fab 2, repayment of convertible debentures in the amount of $7.1
million and repayment of long-term debt in the amount of $3.2 million.

We continue to examine alternatives for additional funding sources in order to
fund our Fab2 ramp-up, support our growth plans and improve our shareholders'
equity, otherwise expected to become negative during 2008.

As of December 31, 2007, we had long-term loans from banks, at fair value, in
the amount of $379.3 million which we obtained mainly in connection with the
establishment of Fab 2. As of such date, we had outstanding, in the aggregate of
$125.3 million of debentures, of which $7.9 million are presented as current
maturities.