Tower Semiconductor set for major expansion in Japan

Tower Semiconductor (TASE: TSEM; Nasdaq: TSEM) has announced a program of strategic expansion of its factory in Japan, and has updated its model for 2028 with a substantial rise in its financial targets. The company has set a revenue target of $3.6 billion for 2028, which compares with a previous target of $2.8 billion, and a net profit target of $1.2 billion, up from $750 million.

As mentioned, the higher targets come against a background of a planned expansion of production capacity in Japan, with support from the Japanese government, in order to meet increasing demand from Tower’s customers. The plan consists of parallel dual-track expansion of the company’s 300mm Silicon Photonics (SiPho), Silicon Germanium (SiGe), and advanced packaging capabilities in Japan.

The company says that 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.

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, the company says.

Tower Semiconductor recently restructured its activity in Japan (the TPSco venture) and acquired full ownership of the 300 mm facility. The company then announced supply contracts amounting to $1.3 billion for Silicon Photonics, one of its main growth engines, for 2027. This is technology that uses light to transmit data within a chip, giving better and faster performance, in demand for data centers in the AI era.

Tower Semiconductor CEO Russell Ellwanger said, “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,” Ellwanger said.

Concerning the dual expansion program, Ellwanger said, “The first track results in substantial increases in our updated 2028 business model. By quickly and efficiently adding capacity to an existing profitable operation, track two eliminates the timing concerns and impacts of multi cycles of learning for a greenfield qualification or a fab-to-fab product transfer, ensuring on schedule customer ramps and cash flow. We anticipate track two to provide the path for continued growth far beyond 2028.”

Tower Semiconductor has a market cap of $26 billion after a 400% rise in its share price in the past year.

Published by Globes, Israel business news – en.globes.co.il – on July 14, 2026.

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