Tower Semiconductor announced a strategic dual-track capacity expansion in Japan with support from the Government of Japan. The expansion will increase the company’s capabilities in 300mm Silicon Photonics, Silicon Germanium, and advanced packaging.
The initiative is designed to support accelerating long-term customer demand and strengthen Tower’s manufacturing capacity in high-value analog semiconductor technologies. Tower said the expansion will also extend its technology leadership in areas tied to AI, data centers, optical connectivity, and advanced semiconductor manufacturing.
The first track adds significant new 300mm Silicon Photonics capacity. Tower expects full production readiness during the fourth quarter of 2027.
Under the first track, Tower plans to repurpose the Arai facility, formerly Fab 6, for 300mm Silicon Photonics capacity and advanced packaging capabilities. The company also plans to maximize output from its Fab 7 300mm facility in Uozu.
Reflecting the expected growth from track one, Tower updated its business model and is targeting $3.6 billion of revenue and $1.2 billion of net profit in 2028.
The second track will begin in parallel with the first and consist of constructing an additional 300mm manufacturing facility adjacent to Fab 7, following the signing and closing of related agreements.
Tower said the second facility is expected to provide a multi-fold increase in Silicon Photonics and Silicon Germanium capacity. This additional capacity is intended to support customer demand tied to emerging AI and data center applications, which are driving next-generation optical connectivity requirements.
The company said the new facility is expected to be highly accretive beginning in 2029, driven by expanded customer engagements and technical milestones achieved through multi-generational strategic partnerships.
The scope of the dual-track expansion is forecasted to represent approximately $3 billion of Tower investment, net of $1 billion in grants to be provided by the Government of Japan. Tower said the investment will help establish advanced domestic manufacturing capabilities in Silicon Photonics and Silicon Germanium while strengthening Japan’s semiconductor ecosystem and supply chain resilience.
Tower has operated in Japan through TPSCo, the former Panasonic Semiconductor manufacturing operations, in which Tower became the majority owner. The company said that the platform has built a reputation for taking advanced innovation into high-volume manufacturing.
Tower said the expansion will build on its long-standing relationships with Toyama and Niigata Prefectures. The company plans to deepen collaboration with local suppliers, businesses, universities, and research institutions while supporting high-quality employment and workforce development.
The expansion is also intended to create a globally differentiated R&D and manufacturing center of excellence in Japan for Silicon Photonics, Silicon Germanium, and advanced optical packaging. Tower said this platform will combine its specialized technology leadership with Japan’s manufacturing expertise, research institutions, and workforce.
KEY QUOTES:
“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.”
Russell Ellwanger, CEO of Tower Semiconductor
“Building on our long-standing relationships with Toyama and Niigata Prefectures and supported by our significant investments in the Uozu and Arai facilities, we look forward to deepening our collaboration to strengthen regional semiconductor infrastructure, expand local supply-chain capabilities, accelerate innovation, developing the next generation of highly skilled engineering and manufacturing talent, a workforce renowned for its commitment, individual ownership, dedication and loyalty. Tower is dedicated to sustaining and creating high-quality employment, recruiting, developing, and retaining world-class engineering and manufacturing talent, expanding collaboration with local suppliers and businesses, and deepening partnerships with Japanese universities and research institutions. By strengthening these industrial and academic ecosystems, Tower seeks to drive innovation, enhance regional competitiveness, and contribute to the sustainable growth and long-term economic development of both prefectures.”
Russell Ellwanger, CEO of Tower Semiconductor
“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.”
Russell Ellwanger, CEO of Tower Semiconductor
