Tower Semiconductor to invest $3 billion in Japan for silicon photonics expansion

Israeli chipmaker Tower Semiconductor announced a $3 billion investment in Japan, of which $1 billion will be covered by Japanese government grants. The plan consists of two phases. The first phase will convert the company's Arai plant (formerly Fab 6) in Niigata into a 300‑mm silicon‑photonic production line, with full operation expected by the fourth quarter of 2027. The second phase will add a new 300‑mm fab adjacent to the existing Fab 7 in Toyama, boosting silicon‑germanium and advanced‑packaging capacity.

The expansion targets growing demand for AI‑driven data‑center workloads and aims to strengthen the global semiconductor supply chain. The total project value is about ¥600 billion (≈$3 billion), with up to ¥1 600 billion in subsidies from Japan’s Ministry of Economy, Trade and Industry. Tower projects 2028 revenue of $3.6 billion and net profit of $1.2 billion, up from prior forecasts of $2.8 billion and $750 million respectively. Following the announcement, the company's U.S.-listed shares rose more than 18 % in pre‑market trading. The investment is part of Japan’s broader push for technological sovereignty in silicon photonics and silicon‑germanium technologies.