Tower Semiconductor announced it has signed Silicon Photonics (SiPho) contracts for $1.3 billion in 2027 revenue with its largest customers and has received $290 million in customer prepayments for capacity reservation. The agreements include an even larger contractual wafer commitment for 2028, with additional associated prepayments due by January 2027. The prepayments represent the contractual capacity reservation commitment, while full customer demand and Tower shipment forecasts are higher. Total 2027 customer demand is further supported by forecasts from a customer base of over 50 active customers spanning a range of SiPho-based applications.
To address this demand, Tower is expanding its worldwide multi-fab SiPho capacity. The company has a targeted model of $2.8 billion revenue and $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 supporting AI-related demand through capacity expansion and investments in capabilities that include 400GHz/lane modulator and detector performance in its native SiPho platform as well as heterogeneously integrated InP/SiPho and TFLN platforms. Additional efforts cover 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 hybrid-bonding capability for 3DIC integration.
The company is also engaged with customers on 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.
