Tower Semiconductor to invest $3 billion in Japan, backed by government grants

Israeli chipmaker Tower Semiconductor said on Tuesday it will invest $3 billion to bolster chip manufacturing in Japan, including $1 billion in grants from the Japanese government.

U.S.-listed shares of the company rose more than 18% in ‌premarket trading ⁠after ⁠the announcement, which is expected to support growing AI ​and data center demand.

The move aims to help the ​company's production of silicon photonics - which uses light to move data faster between AI chips - and ​silicon-germanium technology, which enables faster ⁠and more ‌energy-efficient semiconductor devices.


The expansion will ​occur in ​two phases, with the first ⁠phase involving converting Tower's Arai facility in Japan, ​formerly Fab 6, for 300-millimeter silicon ​photonics production, with full operations expected by the fourth quarter of 2027.

Following this initial capacity expansion, Tower said it expects its 2028 revenue to reach $3.6 billion and net profit ‌to hit $1.2 billion, compared with its previous expectations of $2.8 billion in revenue and $750 ​million ​in net profit.

Tower ⁠said the second phase will begin simultaneously with the first, to build an additional 300mm manufacturing facility next to the company's existing Fab 7 facility.

"We anticipate track two to provide the path for continued growth far beyond 2028," Tower CEO Russell Ellwanger said.