Tower Semiconductor has unveiled plans for a strategic restructuring of its operations in Japan. Currently managed under TPSCo, a company where Tower holds a 51% stake and Nuvoton Technology Corporation Japan (NTCJ) owns the remaining 49%, Tower will assume full ownership of the 300mm facility, known as Fab 7. NTCJ will take complete ownership of the 200mm facility, referred to as Fab 5.
As part of this restructuring, both companies will enter into long-term supply agreements to ensure ongoing support for their respective customer bases. Consequently, customers of Tower currently served through Fab 5 and those of Nuvoton served through Fab 7 will experience no disruption in supply or operations.
The transaction is anticipated to close on April 1, 2027, contingent upon the fulfilment of standard closing conditions and the receipt of necessary regulatory approvals.
TPSCo has previously demonstrated robust operational and R&D capabilities and has been fully integrated into Tower’s global operations. Under the new structure, Tower’s wholly owned subsidiary in Japan will manage all manufacturing production tools, operational staff, and business activities related to Fab 7. This transition is expected to further enhance Tower’s strategic global footprint. Additionally, Tower has the option to acquire the existing Fab 7 building and land.
Subject to the approval of subsidies from Japan’s Ministry of Economy, Trade and Industry (METI), and following a formal application, Tower plans to purchase adjacent land under pre-agreed terms with NTCJ. This acquisition aims to bolster the expansion of its 300mm capacity and capabilities. Tower anticipates that the combined capacity of the existing facility and the planned adjacent expansion will ultimately result in a fourfold increase in the current Uozu 300mm capacity.
Given that Tower’s photonics technologies are already qualified and in volume production from Fab 7 Uozu, the company is optimistic about the accelerated timeline for ramping up capacity to full volume shipments. The first increases in photonics shipments are expected to materialise immediately following the arrival of each new tool in the expanded fab footprint. This expansion is set to take place in a facility that is currently generating positive cash flow from operations, a situation expected to continue throughout the entire build-out period. This approach stands in contrast to greenfield or acquisition-based capacity expansions, which often necessitate years of process development, customer qualification, and financial stabilisation while starting from zero revenue against high fixed costs.
Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, noted, ‘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 further 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 also enhancing Japan’s semiconductor capabilities and ecosystem.’
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