Tower plans to quadruple Japan 300mm fab capacity under METI-backed restructuring

Tower Semiconductor said it will invest $3 billion to expand chip manufacturing in Japan, including a $1 billion grant from the Japanese government, with the first phase centered on a major increase in 300mm silicon photonics capacity and full production expected in the fourth quarter of 2027. The company had previously outlined a broader expansion of its 300mm operations in Uozu, Japan, tied to a March 25, 2026 restructuring of its Japanese business. Under that plan, Tower is unwinding TPSCo, taking full ownership of Fab 7 and transferring full ownership of the 200mm Fab 5 to Nuvoton Technology Corporation Japan for $25 million. The deal is targeted to close on April 1, 2027, subject to regulatory approvals, and Tower has said it will establish a wholly owned Japanese subsidiary to hold Fab 7 while both companies enter mutual long-term supply agreements. The new update adds that phase one will significantly expand 300mm silicon photonics capacity at the upgraded Fab 6, while phase two includes a new 300mm lithography plant next to Fab 7. Tower had earlier said more than 70% of the planned new capacity was already reserved through 2028, that it had secured $1.3 billion in silicon photonics revenue contracts for 2027 including $290 million in customer prepayments, and that it raised its full-year 2026 capital expenditure guidance to $920 million along with its 2028 revenue and profit targets. The investment highlights Japan's continued use of state support to expand domestic semiconductor manufacturing and reflects rising demand for optical technologies used in high-performance computing and AI data center infrastructure.