Tower Semiconductor confirmed on 24 September 2026 that it will spend about $4 billion to make Japan its largest optical-chip hub, backed by roughly $1 billion in subsidies from the Ministry of Economy, Trade and Industry.
From analog fab to 300mm photonics line
The Israeli specialty foundry will convert its Arai facility into a 300mm silicon-photonics and advanced-packaging site, expand its existing Uozu fab and build a new manufacturing line adjacent to it. When the buildout finishes in 2029, monthly capacity is expected to reach about 45,000 300mm wafers — a 40x jump on 2025 output — with roughly 200 new hires.
"This is a long-term response to customer demand for photonics content that scales with AI," chief executive Russell Ellwanger said. Existing partners include Intel and Broadcom, both of which sit downstream of Tower's photonics platform.
Optical chips become the bottleneck
The commitment lands the same day PicoJool closed a $27.5 million Series A for VCSEL modules and days after NVIDIA's Australian 2GW AI buildout — each a bet that scale-up bandwidth, not compute, is the choke point for the next AI wave.
METI keeps writing checks
Japan's economy ministry has now anchored more than $30 billion of semiconductor and photonics subsidies since 2022, chasing Rapidus, TSMC's Kumamoto fab and now Tower's Arai/Uozu program. Tower said the buildout supports co-packaged optics work with NVIDIA, Broadcom and Intel-backed foundry customers.
Reporting based on coverage from Nikkei Asia, Datacenter Dynamics and Reuters.