Tower Semiconductor just committed roughly $3 billion to build out advanced chip manufacturing in Japan, backed by a $1 billion grant from the Japanese government. The investment targets silicon photonics and advanced packaging, two technologies that are quietly becoming the plumbing of every major AI data center on the planet.
What Tower is actually building
The Israel-headquartered foundry, traded on NASDAQ under the ticker TSEM, announced the expansion on July 14. The plan centers on 300mm silicon photonics (SiPho) production and advanced packaging at facilities in Uozu, Japan, leveraging a former Arai facility and an adjacent site called Fab 7.
The first phase of Tower’s dual-track plan targets production readiness by Q4 2027. The company has already locked in more than 70% of the planned new capacity through 2028.
Tower’s silicon photonics revenue contracts for 2027 alone sit at $1.3 billion, with $290 million in customer prepayments already collected.
