Tower Semiconductor (NASDAQ: TSEM) announced it has signed silicon photonics contracts worth $1.3 billion for 2027 revenue with its largest customers. The company has received $290 million in customer prepayments for capacity reservations.

The semiconductor foundry also disclosed larger contractual wafer commitments for 2028, with additional prepayments due by January 2027. Tower operates facilities in Israel, the United States, and Japan, and maintains more than 50 active silicon photonics customers across various applications.

To meet increasing demand, Tower is expanding its worldwide multi-fab silicon photonics capacity. The company targets $2.8 billion in revenue with $750 million in net profit for 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. "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."

The company is developing capabilities for artificial intelligence infrastructure, including 400GHz/lane modulator and detector performance, silicon photonics-based optical circuit switches, and high-performance DWDM lasers. Tower is also working on next-generation modulators using various materials including TFLN, InP, and organic materials.

Tower Semiconductor provides analog semiconductor foundry services across consumer, industrial, automotive, mobile, infrastructure, medical, and aerospace markets. The company operates manufacturing facilities with 200mm and 300mm wafer capabilities.