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Tower Semiconductor to Invest $4 Billion in Japanese Optical Connectivity Semiconductor Production
Key points
- Tower Semiconductor and Japan co-invest $4 billion.
- Expands Japanese fabs for optical-connectivity semiconductors.
- Includes repurposing idle fab, expanding existing 300mm fab.
- New 300mm fab planned; 45,000 300mm wafers/month by 2029.
Major Investment in Japanese Operations
Tower Semiconductor, in collaboration with the Japanese government, announced a $4 billion co-investment to significantly expand its manufacturing capabilities in Japan. The initiative aims to transform the company's regional fabs into a substantial production base for optical-connectivity semiconductors.
This strategic expansion is designed to meet the growing demand for optical engines, particularly from the AI industry, by increasing the output of silicon photonics (SiPho) and silicon-germanium electronic integrated circuits (SiGe EICs).
Dual-Track Expansion Strategy
The expansion plan is divided into two tracks. Track One focuses on converting Tower's idle 200mm Fab 6 in Arai, Niigata Prefecture, into a 300mm facility for SiPho and advanced optical packaging. It also involves expanding the output of SiGe EICs and SiPho PICs at the existing 300mm Fab 7 near Uozu, Toyama Prefecture.
Fab 7 currently produces various SiGe EICs and SiPho PICs using technologies like TPS65SG, TPS65-series 65nm-class SiGe nodes, and TPS45PHD 45nm-class SiPho manufacturing. Track One is expected to be fully operational by Q4 2027, projecting $3.6 billion in revenue and $1.2 billion in net profit for FY2028.
New Fab Construction
Track Two, which runs in parallel, involves constructing an additional 300mm manufacturing facility adjacent to Fab 7 in Uozu. This new fab will substantially increase the output of SiGe EICs and SiPho PICs. Upon completion, Tower will operate two sites in Japan for EIC and PIC production, with the converted Fab 6 handling optical engine assembly.
This second stage is anticipated to contribute to Tower's financial results starting in 2029.
Capacity and Impact
The combined efforts of both tracks are projected to boost Tower's Japanese production capacity to the equivalent of 45,000 300mm wafers per month by 2029. This represents a 40-fold increase compared to 2025 levels.
The investment positions Japan as a key hub for optical connectivity semiconductor manufacturing, addressing the increasing demand for these components in advanced technological sectors like artificial intelligence.
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Reporting from
Tower Semiconductor and the Japanese government will co-invest $4 billion to expand the company's Japanese operations, aiming to establish a major manufacturing hub for optical-connectivity semiconductors. This expansion involves repurposing an idle fab, increasing output at an existing 300mm facility, and building a new 300mm fab, targeting a capacity of 45,000 300mm wafers per month by 2029.