The CFO said model sensitivity is highest to wafer selling prices. Results also depend on tool installation and qualification timing, as well as 85% utilization assumptions.
Q2 results and Q3 guidance
Tower Semiconductor discussed Q2 2026 results on Aug. 4 with CEO Russell Ellwanger, CFO Oren Shirazi and SVP Noit Levy, with analysts attending.
Revenue: USD 460 million
Gross margin: 30%
Operating margin: 20%
Net margin: 20%
Q3 revenue guidance midpoint: USD 520 million
Silicon photonics and RFSOI commentary
Silicon photonics revenue rose 60% quarter over quarter, with Q2 annualized run rate above USD 680 million. Tower is targeting a USD 1 billion run rate in Q4 2026.
Management said about of silicon photonics revenue is under customer contracts for 2027, and described the expansion capacity as “spoken for.”
The SiPho wafer-start ramp from the USD 920 million plan is expected to reach full ramp in Q4 2026, with the full financial effect anticipated in Q2 2027.
Tower also said the transition of RFSOI to 300mm cut 300mm RFSOI revenue 14% year over year, and it expects 3x 300mm wafer starts by mid-2027 versus Q2 2026 shipments.
Updated 2028 model and Japan expansion plans
Management updated its 2028 model to USD 3.6 billion in revenue, 45% gross margin and 33% net margin, with opex ratio targeted near 7% despite 40%+ higher R&D.
Tower outlined a dual-track 300mm expansion in Japan:
Track 1 repurposes Arai (Fab 6) for silicon photonics and advanced packaging, with production readiness targeted for Q4 2027.
Track 2 is a new fab adjacent to Uozu (Fab 7) targeted to be installed and functioning by Q4 2028.
The company said the plan is aimed at more than quadrupling Japan 300mm output.
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