Tower Semiconductor Signs Customer Contracts for $1.3 Billion Silicon Photonics Revenue for 2027

Tower Semiconductor (NASDAQ:TSEM) announced signed Silicon Photonics (SiPho) contracts totaling $1.3 billion for 2027 revenue with its largest customers, alongside $290 million of capacity-reservation prepayments.

Rhea-AI Summary

Tower Semiconductor (NASDAQ:TSEM) announced signed Silicon Photonics (SiPho) contracts totaling $1.3 billion for 2027 revenue with its largest customers, alongside $290 million of capacity-reservation prepayments.

The company reported even larger contracted wafer commitments for 2028, a broad base of 50+ active SiPho customers, and a global capacity ramp aligned with a 2028 financial model targeting $2.8 billion revenue and $750 million net profit.

Positive

• $1.3 billion contracted Silicon Photonics revenue targeted for 2027
• $290 million in customer prepayments for SiPho capacity reservation
• Contractual wafer commitments for 2028 exceed 2027 SiPho levels
• Over 50 active SiPho customers across multiple applications
• Capacity ramp supports 2028 model of $2.8B revenue, $750M net profit

Argus May 13 session

+22.61% close to close Open Argus

Details

News Market Reaction – TSEM

On May 13, the day this news came out, TSEM closed 22.61% above the previous close.

Data tracked by StockTitan Argus for the May 13 session.

Market Context

On May 13, the day this news came out, the stock closed 22.6% above the previous close. A strong pos...

Analysis

On May 13, the day this news came out, the stock closed 22.6% above the previous close. A strong positive reaction aligns with the article’s emphasis on contracted silicon photonics revenue of $1.3 billion for 2027 and received prepayments of $290 million. Investors have previously responded well to capacity expansion and strategic restructuring news, as seen on 2026-03-25. However, execution on the planned $2.8 billion revenue and $750 million net profit model for 2028, capital intensity, and concentration in AI-related demand would remain key risks for sustaining enthusiasm.

Key Figures

SiPho contracts 2027: $1.3 billion Customer prepayments: $290 million 2028 revenue target: $2.8 billion +5 more

SiPho contracts 2027

$1.3 billion

Contracted silicon photonics revenue for 2027 with largest customers

Customer prepayments

$290 million

Prepaid capacity reservations received for silicon photonics

2028 revenue target

$2.8 billion

Targeted company revenue model for 2028

2028 net profit target

$750 million

Targeted net profit in 2028 business model

Active SiPho customers

over 50 customers

Broad silicon photonics customer base across applications

Q1 2026 revenue

$413.6 million

First quarter 2026 revenue, up 15% year-over-year

Q2 2026 revenue guidance

$455 million

Guided record revenue, 22% YoY and 10% sequential growth

Planned capex

$920 million

Aggregate capital expenditures plan focused on SiPho and SiGe expansion

Historical Context

5 past events · Latest: May 04

5 events

1. May 04

   Investor conferences

   24h Move

   -1.4%

   Participation in multiple investor conferences through May and June 2026.

2. Apr 27

   Defense SiGe products

   24h Move

   +1.4%

   Launch of high-power SiGe radar ICs for secure U.S. defense applications.

3. Apr 20

   Earnings timing

   24h Move

   -0.9%

   Announcement of Q1 2026 results release date and conference call details.

4. Mar 25

   Japan fab expansion

   24h Move

   +4.4%

   Plan to expand 300mm Fab 7 capacity in Japan and restructure TPSCo.

5. Mar 25

   TPSCo restructuring

   24h Move

   +4.4%

   Strategic restructuring with Nuvoton, including ownership changes and $25M payment.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

silicon photonics, co-packaged optics (cpo), dwdm lasers, 3dic integration, +2 more

6 terms

silicon photonics technical

"world-leading Silicon Photonics technology platform in meeting the rapidly growing"

Silicon photonics is the technology that uses tiny structures etched into silicon chips to generate, control and detect light for moving data and sensing, essentially putting optical fiber functions onto a computer chip. For investors, it matters because it can dramatically increase data speed and energy efficiency in data centers, telecom networks and advanced sensors, potentially lowering costs and enabling new products much like replacing many metal wires with faster, low-power optical highways.

co-packaged optics (cpo) technical

"Near-Packaged Optics (NPO) and Co-Packaged Optics (CPO) solutions, enabling the"

Co-packaged optics (CPO) are a way of placing optical transmitters and receivers directly next to or on the same chip package as a high-speed switch or processor, rather than keeping them on separate circuit boards. By moving the light-based communications closer to the switching brain, CPO cuts power use, reduces delay and can greatly increase data capacity — changes that can lower operating costs, enable denser data centers, and shift competitive dynamics among hardware suppliers and cloud operators.

dwdm lasers technical

"high-performance high-power DWDM lasers for “wide and slow” CPO architectures;"

DWDM lasers are precision light sources used in fiber‑optic networks to send many separate data channels down a single optical cable by using different colors (wavelengths) of light, similar to assigning each car its own lane on a highway. They matter to investors because they are critical components for high‑capacity telecom, internet and data‑center infrastructure; demand and pricing for these lasers affect revenue and margins at companies that make optical equipment and chips.

3dic integration technical

"and our hybrid-bonding capability for 3DIC integration. Furthermore, Tower is"

3DIC integration is the technique of stacking multiple layers of semiconductor chips or components vertically inside a single package, like piling thin slices of a cake instead of spreading them out on one layer. For investors it matters because this approach can make devices faster, use less power and take up less space, potentially boosting product performance and margins, while also adding manufacturing complexity and supply‑chain or yield risks that can affect costs and profitability.

microring modulators technical

"including TFLN, InP, and organic materials for ultra-high bandwidth, as well as Microring Modulators,"

Microring modulators are tiny ring-shaped components etched onto a chip that control and encode data onto beams of light by letting specific colors pass or be blocked, like a miniature racetrack that decides which cars (light signals) exit and when. They matter to investors because they enable much faster, lower-power data links for telecom, cloud and data-center equipment; better performance and cheaper manufacturing can translate into faster growth, cost savings and competitive advantage for companies using or selling them.

electro-absorption modulators technical

"as well as Microring Modulators, Si-based Electro-Absorption modulators, and uLEDs"

Electro-absorption modulators are tiny devices that control light by changing how much light a material absorbs when an electric signal is applied, similar to using sunglasses whose tint you can switch on and off very fast. They matter to investors because they enable high-speed, low-power data transmission in fiber-optic networks and data centers, so their adoption can boost demand for companies that make optical communication hardware or components.

AI-generated analysis. How Rhea-AI works. Not financial advice.

See more from StockTitan in Google Search and AI answers. Adds StockTitan as a preferred source · opens Google

Add on Google Not now

                                                                                                       

2028 Contracts Demonstrate Substantially Higher Sipho Capacity Reservations

Customer Prepayments of $290 Million Have Been Received

MIGDAL HAEMEK, Israel, May 13, 2026 - Tower Semiconductor (NASDAQ/TASE: TSEM), the leading foundry for high-value analog semiconductor solutions, today announced it has signed Silicon Photonics (SiPho) contracts for $1.3 billion for 2027 revenue with its largest customers, and the receipt of $290 million in customers’ prepayments for capacity reservation. This initial commitment is further reinforced by an even larger contractual wafer commitment for 2028 for which additional associated prepayments are due by January 2027. These financial commitments underscore Tower's market leadership and highlight the critical role of its world-leading Silicon Photonics technology platform in meeting the rapidly growing industry demand.

The pre-paid capacity reservation is the customer contractual commitment, with their full demand and Tower shipment forecast being higher. The total 2027 customer demand is further augmented by healthy forecasts from the rich and broad SiPho customer base of over 50 active customers across wide-ranging SiPho based applications.

To support this accelerating demand, Tower is in the midst of substantial capacity ramp to expand its worldwide multi-fab SiPho capacity, the foundation to achieve the targeted model of $2.8 billion revenue with $750 million net profit in 2028.

“These long-term agreements further strengthen Tower’s strategic position at the center of the rapidly expanding optical connectivity market,” said Russell Ellwanger, Chief Executive Officer of Tower Semiconductor. “These multi-year customer commitments underscore both the depth of our strategic partnerships and our customers’ strong confidence in Tower’s ability to execute on a differentiated, multi-generational silicon photonics technology roadmap addressing the accelerating performance demands driven by AI infrastructure growth. With our unique manufacturing scale, technology breadth, and expanding global capacity, we are well positioned to support the market across today’s high-volume pluggable optical transceivers as well as next-generation Near-Packaged Optics (NPO) and Co-Packaged Optics (CPO) solutions, enabling the continued scaling of data center bandwidth, power efficiency, and connectivity performance.”
Tower is enabling the explosive demand for AI, not only through aforementioned aggressive capacity expansion, but also through strategic investments in capabilities to enable next generation of Scale-out, Scale-across and Scale-up architectures for training and inference AI hardware. A subset of previously announced capabilities include: 400GHz/lane modulator and detector performance demonstrated both in our native SiPho platform as well as in heterogeneously integrated InP/SiPho and TFLN; SiPho based optical circuit switches for ultra-low latency all-optical networks; high-performance high-power DWDM lasers for “wide and slow” CPO architectures; and our hybrid-bonding capability for 3DIC integration.

Furthermore, Tower is actively engaged with key customers on the development of a variety of next-generation modulators, including TFLN, InP, and organic materials for ultra-high bandwidth, as well as Microring Modulators, Si-based Electro-Absorption modulators, and uLEDs for ultra-dense parallel data transmission. Most importantly, Tower continues to partner closely with the industry leading innovators to bring the best of Silicon Photonics technology to market for generations to come.

For additional information about Tower Semiconductor’s SiPho and SiGe technology platform, visit here.

About Tower Semiconductor

Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology, development, and process platforms for its customers in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiPho, SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor currently owns one operating facility in Israel (200mm), two in the U.S. (200mm), and two in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo and shares a 300mm facility in Agrate, Italy with STMicroelectronics. For more information, please visit: www.towersemi.com.

Safe Harbor Regarding Forward-Looking Statements
This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements. A complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect Tower’s business is included under the heading “Risk Factors” in Tower’s most recent filings on Forms 20-F, F-3, F-4 and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Tower does not intend to update, and expressly disclaim any obligation to update, the information contained in this release. 

                                                ###
Tower Semiconductor Company Contact: Orit Shahar | +972-74-7377440 | oritsha@towersemi.com
Tower Semiconductor Investor Relations Contact: Liat Avraham | +972-4-6506154 | liatavra@towersemi.com

Attachment

• Tower_SiPho_Prepayments_PR_FF2_isa

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What Silicon Photonics revenue has Tower Semiconductor (NASDAQ:TSEM) contracted for 2027?

Tower Semiconductor has signed Silicon Photonics contracts targeting $1.3 billion in 2027 revenue. According to Tower Semiconductor, these agreements are with its largest customers and are supported by significant capacity-reservation commitments and a broad base of more than 50 active SiPho customers.

How much in Silicon Photonics prepayments has Tower Semiconductor (TSEM) received in 2026?

Tower Semiconductor has received $290 million in customer prepayments for Silicon Photonics capacity reservation. According to Tower Semiconductor, these prepayments reflect contractual commitments, with customers’ full demand and the company’s shipment forecast expected to be higher than the prepaid reservation amounts.

What are Tower Semiconductor’s 2028 financial targets related to Silicon Photonics?

Tower Semiconductor is targeting $2.8 billion revenue and $750 million net profit in 2028. According to Tower Semiconductor, its expanding worldwide multi-fab SiPho capacity is a key foundation supporting these model targets amid accelerating demand from AI and optical connectivity markets.

How many Silicon Photonics customers does Tower Semiconductor serve, and what does this mean for TSEM investors?

Tower Semiconductor reports a SiPho customer base of over 50 active customers. According to Tower Semiconductor, this rich and broad base supports 2027 demand forecasts and reflects diversified exposure across wide-ranging Silicon Photonics applications, relevant for investors tracking future revenue visibility.

What do Tower Semiconductor’s 2028 wafer commitments indicate for its Silicon Photonics business?

Tower Semiconductor reports larger contractual wafer commitments for 2028 than for 2027. According to Tower Semiconductor, additional prepayments tied to these 2028 commitments are due by January 2027, signaling extended customer engagement with its Silicon Photonics technology platform.

How is Tower Semiconductor expanding capacity to meet Silicon Photonics demand by 2028?

Tower Semiconductor is executing a substantial capacity ramp across its worldwide multi-fab SiPho network. According to Tower Semiconductor, this expansion underpins its 2028 financial model and supports demand from AI-driven optical connectivity, including pluggable transceivers, NPO, and CPO solutions.