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Tower Semiconductor Shares Soar on $3 Billion Japan Expansion Plan
Shares of Tower Semiconductor (NASDAQ:TSEM) surged nearly 19% in pre-market trading on Tuesday after the specialty foundry announced a $3 billion plan to expand its manufacturing operations in Japan, supported by a significant government grant.
Expansion Details
Tower said the investment will follow a dual-track plan to increase its 300mm wafer capacity for Silicon Photonics, Silicon Germanium, and advanced packaging technologies. The Government of Japan will provide $1 billion in grants to support the total investment, according to the company's statement.
The first phase involves converting its Arai facility for 300mm Silicon Photonics and advanced packaging, while also increasing production at its Fab 7 in Uozu. Tower expects this phase to achieve full production readiness in the fourth quarter of 2027.
The second phase, which is contingent on signing related agreements, involves constructing a new 300mm manufacturing facility adjacent to Fab 7. This new plant is designed to further boost Silicon Photonics and Silicon Germanium capacity and is expected to contribute to earnings starting in 2029.
Financial Outlook and Market Reaction
AdIn conjunction with the first phase of the expansion, Tower Semiconductor updated its business outlook. The company is now targeting $3.6 billion in revenue and $1.2 billion in net profit for the year 2028.
Investors reacted positively to the news, with the company's stock price climbing nearly 19% in pre-market trading following the announcement. The investment signals a substantial growth trajectory for the company, backed by strong government support.
Strategic Context
Tower operates in Japan through TPSCo, a joint venture majority-owned by Tower that includes former Panasonic Semiconductor manufacturing operations. The expansion sites are located in the Toyama and Niigata Prefectures.
"We are honored and appreciative that the Government of Japan has selected Tower to lead the expansion of these strategically important technologies," said Tower CEO Russell Ellwanger in the company's announcement. The plan aligns with global efforts to strengthen and diversify semiconductor supply chains.
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