Tower Semiconductor (NASDAQ: TSEM) announced a dual-track expansion of its 300mm Silicon Photonics, Silicon Germanium, and advanced packaging operations in Japan, with $1 billion in grants from the Government of Japan supporting the approximately $3 billion total investment.

The first track involves repurposing the Arai facility, formerly Fab 6, for 300mm Silicon Photonics capacity and advanced packaging, alongside maximizing output at Fab 7 in Uozu. Full production readiness for the first track is expected in the fourth quarter of 2027. In connection with this track, Tower updated its business model, targeting $3.6 billion in revenue and $1.2 billion in net profit for 2028.

The second track involves constructing an additional 300mm manufacturing facility adjacent to Fab 7, pending the signing and closing of related agreements. The new facility is expected to increase Silicon Photonics and Silicon Germanium capacity and is projected to be accretive beginning in 2029.

Tower CEO Russell Ellwanger stated: "We are honored and appreciative that the Government of Japan has selected Tower to lead the expansion of these strategically important technologies."

Tower operates in Japan through TPSCo, which consists of former Panasonic Semiconductor manufacturing operations in which Tower holds a majority ownership position. The expansion sites are located in Toyama and Niigata Prefectures.

The information in this article is based on a press release issued by Tower Semiconductor.