Tower's $4 billion optical-chip build-out in Japan starts inside an already-qualified fab

Track One leans on Fab 7 near Uozu ^[4]. The fab is already fully qualified. It is in mass production of silicon-germanium electronic chips on 65nm-class nodes such as TPS65SG, and of silicon-photonics chips on the 45nm-class TPS45PHD process ^[5]. Adding equipment there lets Tower raise output as each tool is installed, without waiting for a new fab and its process flows to qualify ^[6]. Tower has set full production readiness for Track One in the fourth quarter of 2027 ^[7].

Qualification sets the order of the plan. New capacity goes first onto process flows that already ship, and the building that still has to qualify comes second ^[6][9]. I think this sequence is right: output grows from the first installed tool, and the schedule risk sits in Track Two ^[9]. The layout is sensible too. The converted Fab 6 takes on optical-engine assembly, so the end state has two sites making the electronic and photonic chips and one bonding them together ^[10].

The risk does sit there. Tower's 45,000-wafer target falls in 2029, the same year it expects the new fab beside Fab 7 to start contributing materially ^[2][9]. The headline figure depends on a fab Tower has yet to construct passing qualification on schedule ^[9]. Working back from the 40-fold multiple, Tower's Japanese capacity in 2025 was about 1,125 300mm-equivalent wafers a month ^[1]. Tower plans to hire about 200 people ^[14].

Tower expects Track One alone to support about $3.6 billion of revenue and $1.2 billion of net profit in FY2028 ^[8]. The implied net margin is about 33% ^[2]. That forecast is Tower's claim about its own order book ^[8]. For it to hold, Track One has to hit its late-2027 readiness date and the added tools have to run full in their first year ^[7]. METI's $1 billion covers a quarter of the $4 billion total, and Tower funds the rest ^[3][3].

Nikkei, as reported by Tom's Hardware, says Tower holds more than 80% of contract production of optical communications chips used in servers, with Marvell among its customers ^[11]. At that share, Tower's capacity schedule is most of the contract market's schedule ^[11]. Tom's Hardware ties the project's size to fast-growing demand for optical connectivity in AI infrastructure ^[12]. The report does not include lead times, backlog, or evidence that data-center builds are waiting on optical parts. On this evidence, the dominant contract supplier is committing capital now against demand it expects in 2029 ^[2][11].

Part of the money is for a market where Tower says it trails ^[13]. The company concedes that Intel, TSMC and GlobalFoundries are ahead in co-packaged optics, and plans to bring CPO and its precursor technologies to Uozu ^[13]. It has not disclosed details of that roadmap ^[13].