Detailed Narrative
Silicon Photonics and Silicon Germanium Growth
Tower's market-leading optical transceiver offerings, silicon germanium, and SiPho advanced platforms drove significant growth in 2025. RF infrastructure revenue increased by 75% year-over-year. Combined SiGe and SiPho revenues reached $421 million, representing 27% of corporate revenues in 2025, a substantial increase from $241 million (17%) in 2024. SiPho revenues alone more than doubled, growing from $106 million in 2024 to $228 million in 2025, with Q4 '25 SiPho revenues at $95 million, indicating a $380 million annual run rate.
Capacity Expansion and Customer Commitments
The company announced an additional $270 million CapEx investment, bringing the total CapEx plan to $920 million. This investment aims to expand SiPho capacity to over 5x the actual Q4 '25 monthly wafer shipments. Notably, over 70% of this expanded SiPho capacity is already reserved or in the process of reservation through 2028, firmly backed by customer prepayments, providing strong forward demand visibility and confidence in the accelerated financial model.
Advanced Technology Development and Co-packaged Optics
Tower is actively progressing in next-generation 400-gigabit per lane technologies, including heterogeneously integrated indium phosphide on silicon. The company views co-packaged optics (CPO) as a substantial incremental opportunity, particularly as optics are adopted in scale-up interconnects and XPU to high-bandwidth memory interconnects. They are also working on dense wavelength division multiplexing laser sources, which could significantly expand their served optical market.
RF Mobile and Power Management Performance
RF mobile represented 23% of 2025 corporate revenue, with 300mm RFSOI showing a 5.5% year-over-year increase, despite the overall RF mobile segment declining 15%. This decline was attributed to a strategic shift away from lower-margin controller offerings and a market transition from 200mm to 300mm. Power Management demonstrated strong growth, up 20% year-over-year, driven by both 200mm and 300mm offerings, including the ramp of a Tier 1 handset envelope tracker.
Sensors and Displays & Other Segments
The Sensors and Displays segment grew 10% year-over-year, benefiting from strength in the machine vision market and the commencement of production for silicon backplane for OLED on silicon in the AR display segment. Conversely, Mixed signal CMOS and Discrete segments experienced decreases of 18% and 14% year-over-year, respectively, aligning with the company's strategy to reallocate capacity to higher-margin platforms.
Fab Utilization and Intel Fab 11X Update
Fab utilization rates varied across facilities in Q4 FY25, with Fab 2 at 60%, Fab 3 at 85%, Fab 5 at 75%, Fab 7 fully utilized (above 85%), and Fab 9 at 65%, reflecting ongoing SiPho and SiGe ramps and qualifications. The company also disclosed that Intel expressed its intention not to proceed with the September '23 Fab 11X agreement, leading to an ongoing mediation process and redirection of affected customers to Fab 7 in Japan.