Demand for optical communications surges, Tower wins 8.822 billion yuan silicon photonics order

On May 13, Israeli wafer foundry Tower Semiconductor (hereinafter referred to as "Tower") announced that the company had signed a silicon photonics business contract worth up to US$1.3 billion (approximately RMB 8.822 billion) with its core major customer. This huge contract revenue is expected to be realized in 2027, fully reflecting the current market's urgent demand for high-speed optical interconnect technology.

Currently, Tower has received an advance payment of US$290 million from customers to lock in critical production capacity. The commitment will be extended to 2028, when the wafer booking volume involved in the contract will increase significantly, and the relevant additional advance payment is expected to be received before January 2027.

Tower CEO Russell Ellwanger pointed out that the long-term agreement not only consolidates the company's core position in the AI ​​infrastructure supply chain, but also supports the evolution of optical communication technology from high-capacity pluggable transceivers to next-generation near-package (NPO) and co-packaged optics (CPO) solutions through its differentiated technology roadmap, providing guarantee for the continued expansion of data center bandwidth and energy efficiency.

As the world's leading expert in high-value analog semiconductor foundry solutions, Tower is headquartered in Migdel Haymank, Israel. The company is committed to providing advanced process platforms for multiple growth markets such as automobiles, industry, mobile communications, medical and aerospace.

Tower's broad technology portfolio covers silicon photonics, silicon germanium, mixed signal, radio frequency complementary metal oxide semiconductor and integrated power management. In order to ensure global multi-source supply, Tower currently has multiple wafer fabs in Israel, the United States and Japan, and jointly operates a 300mm wafer production line with STMicroelectronics in Italy.

Recently, Tower has also achieved full control of Japan's Fab 7 factory through restructuring, and continues to invest in cutting-edge technologies such as 400GHz modulators, optical switches, and 3D integrated hybrid bonding, laying the technology and production capacity foundation for its target model of achieving annual revenue of US$2.8 billion and net profit of US$750 million in 2028.

While expanding its business, Tower's financial performance also showed strong growth momentum in the first quarter of fiscal year 2026.

During the reporting period, Tower achieved revenue of US$414 million, a year-on-year increase of 15% from US$358 million in the same period in 2025. In terms of profitability, gross profit increased by 52% to US$111 million, and operating profit increased by 96% year-on-year to US$65 million; net profit was US$65 million.

Driven by continued strong orders and AI-driven demand, Tower expects the company's revenue to reach $455 million in the second quarter of 2026, setting a record for the highest quarter in the company's history, and is expected to achieve continued quarter-on-quarter growth throughout the year.