Tower Semiconductor reported quarterly revenue tracking toward $500 million milestone, driven by surge in AI chip demand.

Tower has been riding the silicon photonics boom for more than a year after identifying the growing need to replace copper-based interconnects in AI data centers with optical infrastructure capable of handling dramatically larger volumes of data at much higher speeds. The company has already secured customer commitments worth more than $1 billion for 2027, nearly equal to its entire 2025 revenue.

About a month ago, Tower announced a $4 billion project to expand silicon photonics manufacturing capacity in Japan, backed by a $1 billion grant from the Japanese government. The expansion will be carried out in two phases.