Related to Silicon Photonics Technology! NVIDIA Partners Aggressively Expand Production, with 70% of Future Capacity Possibly Already Booked

On Wednesday local time, Tower Semiconductor, the eighth-largest wafer foundry in the world, announced its financial results for Q4 2025 and the full year.

In the fourth quarter of last year, Tower achieved a record high in quarterly revenue, reaching $440 million, up 14% year-over-year and 11% sequentially; net profit was $80 million, with basic earnings per share of $0.71 and diluted earnings per share of $0.70. In the previous quarter, net profit was $54 million, with basic earnings per share of $0.48 and diluted earnings per share of $0.47.

The company expects revenue for Q1 2026 to be $412 million, with a variance of plus or minus 5%, representing a 15% year-over-year increase.

What has attracted significant industry attention is Tower’s aggressive capital expenditure and expansion efforts in silicon photonics this time.

A few days ago, Tower announced a collaboration with NVIDIA to support 1.6T data center optical modules for next-generation AI infrastructure using high-performance silicon photonics technology. The focus of this partnership is to achieve high-speed optical connections compatible with NVIDIA’s network protocols, thereby expanding AI infrastructure deployment.

In this earnings report, the company stated that demand for silicon photonics (SiPho) and silicon-germanium (SiGe) continues to grow. Based on collaborative planning with core customers and on the previously announced and ongoing $650 million capital expenditure plan, an additional $270 million will be invested in equipment to enhance SiPho capacity and next-generation technology capabilities, bringing the total investment in SiPho and SiGe to $920 million—an increase of over 40% from the original plan.

Tower aims to complete all equipment installation and full certification of its capital expenditure projects by Q4 2026, with full production starting in 2027. The CEO revealed that by December 2026, the monthly production capacity of silicon photonics wafers will exceed five times the actual monthly shipments of Q4 2025.

By 2028, over 70% of Tower’s total silicon photonics capacity will be booked or in the process of being booked, with customer prepayments providing assurance.

It is noteworthy that this marks Tower’s re-expansion in recent months. At the Q4 2025 earnings call in November, Tower announced an additional $300 million investment to expand silicon photonics and silicon-germanium capacity at its eight-inch wafer fab, expecting silicon photonics capacity to triple or more.

Since last year, driven by the continuous growth in AI computing power demand, the optical module industry has maintained a high boom. On one hand, silicon photonics optical modules are increasingly recognized by end customers due to their high integration, low energy consumption, and low cost; on the other hand, amid shortages of raw materials for EML solutions, silicon photonics has become a key capacity supplement.

CICC Securities pointed out that the increased demand for inference and training computing power drives the growth of the data center optical module market. The ongoing penetration of AI applications by domestic and international cloud providers has led to a rapid increase in token processing volume. The widespread application of large AI models in the future will further boost inference and training computing power needs and promote the continuous growth of the data center optical module market. Additionally, the cluster deployment of ASIC chips has restructured data center network architecture, raising higher requirements for the quantity and transmission speed of optical modules. The proportion of optical modules corresponding to ASIC chips will also increase. As ASIC shipments grow, the demand for supporting optical modules is expected to rise rapidly.

(Source: Cailian Press)