Tower Semiconductor has announced a strategic restructuring of its Japan operations that will result in the company taking full ownership of a 300mm semiconductor facility while significantly expanding its manufacturing capacity. The restructuring involves TPSCo, a Japanese company currently held 51% by Tower and 49% by Nuvoton Technology Corporation Japan (NTCJ), a fully owned subsidiary of Nuvoton Technology Corporation.

Under the new structure, Tower will take full ownership of the 300mm facility known as Fab 7, which will be organized under a fully owned Japanese subsidiary of Tower. Meanwhile, NTCJ will take full ownership of the 200mm facility called Fab 5. The transaction is targeted to close on April 1, 2027, subject to the satisfaction of customary closing conditions and receipt of applicable regulatory approvals.

Operational Continuity and Customer Support

As part of the strategic restructuring, the companies will enter into mutual long-term supply agreements to ensure continued support for existing customers of both companies. Tower customers currently served through Fab 5 (200mm), and Nuvoton customers served through Fab 7 (300mm) will experience no disruption to supply or operations during the transition.

TPSCo, previously a 51%-owned subsidiary of Tower, has demonstrated strong operational and R&D capabilities and has been fully integrated into Tower's global operations and business units. Under the new structure, Tower's wholly owned subsidiary in Japan will own all Fab 7 (300mm) manufacturing production tools, operations, employees, and business activities.

Expansion Plans and Government Support

Tower has secured an option to purchase the existing Fab 7 building and land as part of the agreement. The company's expansion plans are contingent upon subsidy approval from Japan's Ministry of Economy, Trade and Industry (METI), following a formal application. Upon approval, Tower will purchase adjacent land under pre-agreed terms between Tower and NTCJ to support the expansion of its 300mm capacity and capabilities.

The company targets the combined capacity across the existing facility and the intended adjacent expansion to result in four times the current Uozu 300mm capacity once completed. Tower believes this intended capacity investment to full volume shipments will be substantially accelerated,ated given that the company's photonics technologies are already qualified and shipping in volume from F7 Uozu.

Photonics Technology and Financial Projections

The first increases in photonics shipments are expected to occur immediately upon each new tool arriving in the expanded fab footprint. This expansion is targeted to occur in a facility that is presently strongly cash flow positive and is targeted to stay so during the entire build-out period.

Tower emphasizes that this approach contrasts sharply with greenfield or acquisition-based capacity expansions, which typically require years for process development, customer qualification, and financial stabilization while ramping from zero revenue against high fixed costs.

Executive Commentary

Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, commented on the restructuring: "TPSCo has been built upon decades of strong operational expertise and collaboration. We appreciate the legacy and partnership developed with Panasonic and Nuvoton, and we are pleased to evolve our relationship with Nuvoton from joint ownership to long-term strategic supplier and customer partnerships that support the growth strategies of both companies."

Ellwanger added: "This step enables Tower to further strengthen our differentiated optical and photonics technology platforms through a large and profitable expansion of our 300mm operational capabilities. We are excited to work closely with Japan's Ministry of Economy, Trade and Industry in advancing photonics innovation and building a long-term growth engine for our company and customers, whilst strengthening Japan's semiconductor capabilities and ecosystem."

The restructuring represents a significant shift in Tower Semiconductor's Japan operations, moving from a joint venture structure to full ownership of the 300mm facility while maintaining strategic partnerships through long-term supply agreements. The planned expansion aims to quadruple current capacity at the Uozu facility, positioning Tower to meet growing demand for photonics technologies while leveraging existing operational expertise and customer relationships.

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