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3w ago

Tower Semiconductor Announces $3 Billion Japan Expansion Backed by $1 Billion in METI Grants

Tokyo’s grant will lower financing risk for a two‑track buildout that aims to scale optical interconnects and high‑speed mixed‑signal chips.

An operator handles a pod containing silicone chips in the clean room of Israeli analog integrated circuits developer, Tower Semiconductor at their offices in Migdal HaEmek, northern Israel, February 28, 2022. Picture taken on February 28, 2022. REUTERS/Amir Cohen
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Overview

  • Tower disclosed on Tuesday that it will invest $3 billion in Japan, with the Ministry of Economy, Trade and Industry providing $1 billion in grants to support the program.
  • The two‑track plan repurposes the Arai site (formerly Fab 6) and boosts output at Fab 7 to add 300mm silicon photonics, silicon‑germanium and advanced packaging capacity, with phase‑one production targeted by Q4 2027.
  • The company completed a March restructuring to unwind the TPSCo joint venture so Tower will take sole control of 300mm Fab 7 while Nuvoton takes Fab 5 for $25 million, with the asset transfer due to close by April 1, 2027.
  • Tower raised its 2028 guidance to about $3.6 billion in revenue and $1.2 billion in net profit, said much of the new capacity is already reserved with sizable contracts and $290 million in customer prepayments, and its shares jumped double digits after the announcement.
  • Key next steps include formal subsidy approvals, regulatory clearances and contract signings for the second 300mm facility, and the project could accelerate Japan’s push to onshore chip capacity for AI and data‑center networks.