Significant Multiples of Silicon Photonics and Silicon Germanium Capacity to Support Accelerating Customer Demand
MIGDAL HAEMEK, Israel, July 14, 2026 – Tower Semiconductor (NASDAQ/TASE: TSEM), a leading foundry of high-value analog semiconductor solutions, today announced a parallel dual-track strategic expansion of its 300mm Silicon Photonics (SiPho), Silicon Germanium (SiGe), and advanced packaging capabilities in Japan, with support from the Government of Japan. The expansion is designed to support the rapidly growing long-term customer demand, substantially increasing the Company's manufacturing capacity and extending its technology leadership.
Russell Ellwanger, Tower's CEO, stated: "We are honored and appreciative that the Government of Japan has selected Tower to lead the expansion of these strategically important technologies. Together, we are building a globally differentiated center of excellence founded on technology leadership, manufacturing excellence, and exceptional product quality.
Since becoming the majority owner of the former Panasonic Semiconductor manufacturing operations, now TPSCo, this group has established a reputation for transforming cutting-edge innovation into high-volume manufacturing excellence. For these reasons, with the support of the Government of Japan, we will create a globally differentiated, advanced R&D and manufacturing center of excellence for Silicon Photonics, Silicon Germanium, and advanced optical packaging of very significant scale.
By combining Tower's specialized technology leadership with Japan's unparalleled manufacturing expertise, world-class research institutions, and deeply committed workforce, we are building a strategic platform that will drive innovation, economic growth, and semiconductor leadership for decades to come."
Track one adds significant new 300mm Silicon Photonics capacity, with full production readiness expected during the fourth quarter of 2027. It consists of repurposing the Arai facility, formerly Fab 6, for 300mm Silicon Photonics capacity and advanced packaging capabilities, maximizing the Company's Fab 7 300mm output in Uozu. Reflecting upon the track one growth outlook, Tower is updating its business model, targeting to achieve $3.6 billion of revenue and $1.2 billion of net profit in 2028.
Track two will commence in parallel with the first track and consists of constructing an additional 300mm manufacturing facility, adjacent to Fab 7, following signing and closing of related agreements. This facility is expected to provide a multi-fold increase in Silicon Photonics and Silicon Germanium capacity, positioning Tower to support continued accelerating customer demand for emerging AI and data center applications, driving next-generation optical connectivity requirements.