With major silicon photonics wins and growing AI adoption, Tower Semiconductor signals sustained momentum toward its ambitious 2028 financial targets.
Tower Semiconductor has issued an upbeat revenue forecast for the second quarter, supported by growing demand for advanced semiconductor solutions powering artificial intelligence (AI) data centers and high-speed communications infrastructure.
The Israeli contract chipmaker expects second-quarter revenue of about $455 million, surpassing analysts’ average estimate of $436.4 million. The stronger outlook reflects rising customer investments in AI-driven computing and data center expansion, which continue to fuel demand for analog and mixed-signal semiconductor technologies.
A key growth driver is the company’s progress in silicon photonics — a technology that uses light to transmit data at extremely high speeds with lower power consumption. Tower Semiconductor announced it secured $1.3 billion worth of silicon photonics supply agreements, with revenue contributions beginning in 2027. These solutions are increasingly critical for AI data centers handling massive volumes of data traffic.
The company has also received $290 million in advance payments from customers to secure long-term manufacturing capacity. In addition, customers have committed to expanding orders for 2028, with further prepayments expected by early 2027, signaling strong visibility into future demand.
Following the announcement, Tower Semiconductor’s U.S.-listed shares rose more than 17% in early trading, reflecting investor optimism around its AI-focused growth strategy.
CEO Russell Ellwanger said the company remains on track to achieve its long-term financial goals of $2.8 billion in annual revenue and $750 million in net profit by 2028.
For the first quarter, Tower reported revenue of $414 million, a 15% year-on-year increase that exceeded market expectations. Adjusted earnings reached 65 cents per share, beating analysts’ forecasts of 56 cents.
Separately, rival GlobalFoundries filed a lawsuit earlier this year alleging patent infringement related to chip manufacturing technologies used in smartphones and other electronic devices.
