Tower Semiconductor has outlined a parallel dual?track expansion of its 300 mm manufacturing capabilities in Japan, targeting Silicon Photonics (SiPho), Silicon Germanium (SiGe), and advanced optical packaging, with financial and policy support from the Government of Japan.
The program is designed to meet fast?growing, long?term customer demand while scaling capacity and reinforcing the company’s position in next?generation optical technologies.
Since taking majority ownership of the former Panasonic Semiconductor operations, now TPSCo, Tower’s Japan group has built a reputation for turning cutting?edge innovation into high?volume manufacturing.
Building on that track record, the company plans to establish a globally differentiated R&D and manufacturing center of excellence for Silicon Photonics, Silicon Germanium, and advanced optical packaging, leveraging Japan’s manufacturing strengths, research ecosystem, and skilled workforce to drive innovation and long?term semiconductor leadership.
The first track focuses on adding substantial new 300 mm Silicon Photonics capacity, with full production readiness targeted for the fourth quarter of 2027. This phase involves repurposing the Arai facility, formerly Fab 6, for 300 mm Silicon Photonics and advanced packaging, while maximizing output from Fab 7 in Uozu. Reflecting this growth outlook, Tower has updated its business model and is now targeting $3.6 billion in revenue and $1.2 billion in net profit in 2028.
The second track will begin in parallel and calls for construction of an additional 300 mm facility adjacent to Fab 7, following the signing and closing of related agreements.
The new fab is expected to deliver a multi?fold increase in Silicon Photonics and Silicon Germanium(SiGe) capacity, positioning Tower to support accelerating customer demand tied to emerging AI and data?center applications that require next?generation optical connectivity.
Backed by expanded customer engagements and multi?generation strategic partnerships, the additional facility is expected to be highly accretive from 2029 onward, reinforcing Tower’s leadership in the optical domain while supporting long?term employee pride and strong customer satisfaction under a business model geared for durable growth.
Overall, the dual?track expansion is forecast at around $3 billion in Tower’s own investment, net of $1 billion in grants from the Government of Japan.
By anchoring advanced domestic manufacturing in Silicon Photonics and Silicon Germanium, the program is intended to create long?term value for both Tower and Japan, strengthening the country’s semiconductor ecosystem and enhancing supply chain resilience.
Leadership Comments
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.
Ellwanger further added: “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 Semiconductor 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.”
Ellwanger concluded: “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.”
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