Tower Semiconductor Invests $3 Billion to Expand Japan Chip Capacity

Tower Semiconductor announced a $3 billion investment to expand its chip manufacturing capabilities in Japan, supported by $1 billion in grants from the Government of Japan. The dual-track expansion focuses on 300-millimeter silicon photonics, silicon-germanium, and advanced optical packaging to meet rising demand for AI, data centers, and energy-efficient networking.

The first phase of the strategy involves converting the Arai facility, formerly known as Fab 6, with full operations expected by the fourth quarter of 2027. Simultaneously, the company will construct a new 300mm manufacturing facility adjacent to the existing Fab 7 site in Uozu. This growth follows a restructuring of the company's TPSCo venture, which integrated former Panasonic Semiconductor manufacturing operations.

Following the announcement, Tower Semiconductor raised its 2028 financial outlook, projecting $3.6 billion in revenue and $1.2 billion in net profit. The company's shares surged in premarket trading, with reports of gains ranging between 10.9% and 19%. The project aims to strengthen the regional semiconductor supply chain through collaboration with local prefectures, universities, and businesses.