News: Optoelectronics
14 May 2026
Tower signs customer contracts for $1.3bn silicon photonics revenue for 2027
Specialty analog foundry Tower Semiconductor Ltd of Migdal Haemek, Israel has signed silicon photonics (SiPho) contracts for $1.3bn for 2027 revenue with its largest customers, and the receipt of $290m 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.
The pre-paid capacity reservation is the customer’s contractual commitment, with their full demand and Tower shipment forecast being higher. The total 2027 customer demand is further augmented by forecasts from the 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 a substantial capacity ramp to expand its worldwide multi-fab SiPho capacity, the foundation to achieve the targeted model of $2.8bn revenue with $750m net profit in 2028.
“These long-term agreements further strengthen Tower’s strategic position at the center of the rapidly expanding optical connectivity market,” reckons Tower’s CEO Russell Ellwanger. “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,” he adds. “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 the aggressive capacity expansion but also through strategic investments in capabilities to enable the 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 Tower’s native SiPho platform as well as in heterogeneously integrated indium phosphide (InP)/SiPho and thin-film lithium niobate (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 the firm’s 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 micro-ring modulators, Si-based electro-absorption modulators, and micro-LEDs for ultra-dense parallel data transmission. Most importantly, Tower says that it continues to partner closely with the industry-leading innovators to bring silicon photonics technology to market.
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