Tower Semiconductor lands $1B Japan grant to fund $3B AI chip expansion
What's the deal? Tower Semiconductor (NASDAQ:TSEM) will invest $3 billion to expand its semiconductor manufacturing in Japan, backed by a $1 billion grant from the government of JapanDealroom has a profile for this one. Try Dealroom →. The move sent its US-listed shares more than 18% higher in premarket trading.
Why now? The investment targets rising global demand for advanced chips used in AI infrastructure and data centres. It focuses on silicon photonics, which speeds data transmission between AI processors using light, and silicon-germanium, which supports higher-performance, more energy-efficient devices.
What's the endgame? The project runs in two phases. First, Tower will convert its Arai facility, formerly Fab 6, into a 300mm silicon photonics site, with commercial operations expected in the fourth quarter of 2027.
The second phase, starting alongside the first, adds a new 300mm fabrication plant next to the existing Fab 7 site. "We anticipate track two to provide the path for continued growth far beyond 2028," chief executive officer Russell Ellwanger said.
By the numbers: After the first phase, Tower forecasts 2028 revenue of roughly $3.6 billion and net profit of $1.2 billion. That is up from its earlier outlook of $2.8 billion in revenue and $750 million in net income.
The signal: The $1 billion grant ranks among the largest state-backed hardware awards tied to an Israeli company on record. It underscores how governments are subsidising chip capacity to secure a foothold in the fast-expanding AI semiconductor supply chain.
Read more: finance.yahoo.com
Image credit: IBM Research
