Israeli chip foundry Tower Semiconductor has announced a major strategic expansion in Japan aimed at significantly increasing its 300mm silicon photonics (SiPho), silicon germanium (SiGe), and advanced packaging capabilities.

Supported by the Government of Japan, the dual-track initiative is designed to meet rising long-term customer demand while strengthening the company’s position in optical and analog semiconductor manufacturing.

The expansion is expected to substantially increase production capacity and reinforce Tower’s technology leadership in key semiconductor segments serving artificial intelligence, data center and next-generation connectivity markets.

“We are honored and appreciative that the Government of Japan has selected Tower to lead the expansion of these strategically important technologies,” said Russell Ellwanger, CEO of Tower Semiconductor. “Together, we are building a globally differentiated center of excellence founded on technology leadership, manufacturing excellence, and exceptional product quality.”

Investment Strengthens Japan’s Semiconductor Ecosystem

The overall dual-track program represents an estimated US$3 billion investment by Tower, net of approximately US$1 billion in grants expected from the Japanese government.

The company said the initiative will strengthen domestic capabilities in SiPho and SiGe manufacturing, improve supply chain resilience and support the broader Japanese semiconductor ecosystem.

“By combining Tower’s specialized technology leadership with Japan’s unparalleled manufacturing expertise, world-class research institutions, and deeply committed workforce, we are building a strategic platform that will drive innovation, economic growth, and semiconductor leadership for decades to come,” Ellwanger said.

The project is also expected to expand collaboration with local suppliers, universities and research institutions while supporting workforce development in the Toyama and Niigata regions.

First Expansion Track Repurposes Existing Facility

The first phase of the initiative focuses on adding significant new 300mm SiPho  capacity. Tower will repurpose its Arai facility, formerly known as Fab 6, to support silicon photonics manufacturing and advanced packaging operations. The move is intended to maximize output from the company’s existing Fab 7 facility in Uozu.

Full production readiness for the first track is expected during the fourth quarter of 2027. As a result of the planned capacity increase, Tower has updated its business outlook and is targeting revenue of US$3.6 billion and net profit of US$1.2 billion in 2028.

New Manufacturing Facility Planned Adjacent to Fab 7

Running in parallel, the second track involves constructing an additional 300mm manufacturing facility next to Fab 7, subject to the completion of related agreements.

According to the company, the new plant will deliver a multi-fold increase in Silicon Photonics and Silicon Germanium production capacity. The expansion is intended to support accelerating demand from AI and data center customers that require advanced optical connectivity solutions. Tower expects the facility to become highly accretive beginning in 2029, driven by expanded customer engagements and progress achieved through long-term technology partnerships.

15 July 2026