Tower Semiconductor signs $1.3B in AI chip deals, Q1 2026 earnings

Silicon photonics chips usage airy alternatively of electrical signals to transmit data, which makes them perfect for the high-speed needs of AI information centers. Customers buying silicon photonics capableness paid Tower $290 cardinal upfront and person promised to summation their 2028 orders. Another circular of beforehand payments is expected by January 2027.

"We are assured successful our way toward achieving our fiscal exemplary targets of $2.8 cardinal successful yearly gross and $750 cardinal successful nett net successful 2028," CEO Russell Ellwanger said successful a statement.

The contracts were disclosed alongside Tower's first-quarter results, which showed gross of $414 million, up 15% from the aforesaid play a twelvemonth earlier. Gross nett roseate 52% twelvemonth implicit twelvemonth to $111 million, and nett net reached $65 million, oregon $0.58 per basal share, compared with $40 million, oregon $0.36 per basal share, successful the archetypal 4th of 2025.

Shares of Tower Semiconductor were trading up much than 17% successful premarket enactment Wednesday, Reuters reported.

Tower's second-quarter gross guidance of $455 cardinal — a grounds for the company, fixed with a plus-or-minus 5% scope — came successful good supra the $436.4 cardinal Wall Street had anticipated, and would people 22% maturation compared with the aforesaid 4th past twelvemonth and a 10% sequential summation from the archetypal quarter.

Tower's silicon photonics concern sits wrong a broader surge of concern successful optical technologies for AI infrastructure. Corning, which reported a 36% year-over-year summation successful its optical communications conception successful the archetypal quarter, has entered semipermanent fiber-optic proviso agreements with aggregate hyperscale information halfway operators. Separately, Nvidia and Corning announced a concern to physique optical manufacturing facilities successful North Carolina and Texas for AI infrastructure.

Tower operates factories successful Israel, the U.S., Japan, and Italy. Its chips are utilized successful industries specified arsenic automotive, concern manufacturing, user electronics, and communications. The institution aims for dependable quarter-over-quarter maturation successful gross and margins done 2026, with a semipermanent extremity of $2.8 cardinal successful yearly gross and $750 cardinal successful nett net by 2028.