Tower Semiconductor (TSEM) Signs $1.3B Silicon Photonics Customer Contracts for 2027 Revenue

Maham Fatima

Mon, May 18, 2026 at 10:38 AM EDT 2 min read

Tower Semiconductor Ltd. (NASDAQ:TSEM) is one of the best performing semiconductor stocks so far in 2026. On May 13, Tower Semiconductor signed Silicon Photonics/SiPho customer contracts valued at $1.3 billion for 2027 revenue. The company has already secured $290 million in customer prepayments for capacity reservations from its largest clients. This initial commitment is backed by an even larger contractual wafer commitment for 2028, with the corresponding prepayments due by January 2027.

The capacity reservations reflect minimum contractual commitments, though total shipment forecasts and demand from over 50 active SiPho clients are expected to be higher. To meet this accelerating demand, Tower is executing a global multi-fab capacity ramp. This expansion underpins its 2028 long-term financial model, which targets $2.8 billion in total revenue and $750 million in net profit.

The multi-year agreements are driven by rapid AI infrastructure growth and escalating data center bandwidth demands. To support next-gen hardware, Tower Semiconductor Ltd. (NASDAQ:TSEM) is investing in advanced optical architectures, including 400GHz/lane performance, optical circuit switches, and 3DIC hybrid-bonding. The company is also collaborating with industry innovators on next-gen modulators for ultra-high-bandwidth data transmission.

Posonskyi Andrey/Shutterstock.com

Tower Semiconductor Ltd. (NASDAQ:TSEM) is a leading independent foundry specializing in high-value analog semiconductor solutions. It manufactures customized analog ICs (including radio frequency (RF), power management, and CMOS image sensors) for over 300 customers.

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