Tower Semiconductor, Japan to Invest $4B in Domestic Fabs

Tower Semiconductor and the Japanese government plan to co-invest about $4 billion in Tower's Japanese operations, the company said. Tower will put up $3 billion of its own money, while Japan's Ministry of Economy, Trade and Industry (METI) provides $1 billion.

The plan is split into two tracks. Track One converts the idle 200mm Fab 6 in Arai, Niigata Prefecture, into a 300mm facility for silicon photonics and advanced optical packaging. It also expands output of SiGe EICs and SiPho PICs at the 300mm Fab 7 near Uozu, Toyama Prefecture, which is already in mass production using TPS65SG and other TPS65-series 65nm-class SiGe nodes and TPS45PHD 45nm-class SiPho technology.

Track One is scheduled to reach full production readiness in the fourth quarter of 2027. Tower expects it to generate approximately $3.6 billion in revenue and $1.2 billion in net profit in FY2028.

Track Two involves building another 300mm fab next to Fab 7 in Uozu, with material contributions to Tower's financial results expected in 2029. By then, Tower expects Japanese capacity to reach the equivalent of 45,000 300mm wafers per month, about 40 times higher than 2025 levels. The company plans to hire approximately 200 people.

Tower controls more than 80% of the contract production market for optical communications semiconductors used in servers and serves industry leaders including Marvell. It acknowledges Intel, TSMC, and GlobalFoundries are ahead in co-packaged optics.

Tower established its Japanese manufacturing presence in 2014 by forming TowerJazz Panasonic Semiconductor Co. with Panasonic, owning 51%. Panasonic's stake passed to Nuvoton Technology Corporation Japan after Panasonic exited the semiconductor business in 2020. The investment was reported by tomshardware.com.