July 14 (Reuters) – Israeli chipmaker Tower Semiconductor said on Tuesday it will invest $3 billion to bolster chip manufacturing in Japan, including $1 billion in grants from the Japanese government.
U.S.-listed shares of the company rose more than 18% in premarket trading after the announcement, which is expected to support growing AI and data center demand.
The move aims to help the company’s production of silicon photonics – which uses light to move data faster between AI chips – and silicon-germanium technology, which enables faster and more energy-efficient semiconductor devices.
The expansion will occur in two phases, with the first phase involving converting Tower’s Arai facility in Japan, formerly Fab 6, for 300-millimeter silicon photonics production, with full operations expected by the fourth quarter of 2027.
Following this initial capacity expansion, Tower said it expects its 2028 revenue to reach $3.6 billion and net profit to hit $1.2 billion, compared with its previous expectations of $2.8 billion in revenue and $750 million in net profit.
Tower said the second phase will begin simultaneously with the first, to build an additional 300mm manufacturing facility next to the company’s existing Fab 7 facility.
“We anticipate track two to provide the path for continued growth far beyond 2028,” Tower CEO Russell Ellwanger said.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Vijay Kishore)
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