photo above: Intel’s Fab 11 facility where Tower’s chips were manufactured. Photo: Intel

Intel has withdrawn from its joint manufacturing agreement with Tower Semiconductor at Intel’s Fab 11X chip manufacturing facility in New Mexico, USA. Following the cancellation, the two companies entered arbitration proceedings. Tower has begun transferring customer production from Intel’s facility to its own Fab7 plant in Japan. The development was disclosed in a brief note at the end of Tower’s quarterly report released yesterday.

The manufacturing agreement was signed in September 2023, about three weeks after Intel’s planned acquisition of Tower was terminated. The deal allowed Intel to utilize a largely idle factory producing older-generation technologies. At the time, Intel Foundry Services (IFS) senior executive Stuart Pann said Tower’s investment would enable the equipment to be activated while Intel provided manufacturing services at the site.

Under the agreement, Tower committed to invest approximately $300 million to transfer processes and install production equipment, which would remain its property. In return, IFS would provide manufacturing services for power devices and RF SOI wireless solutions at volumes exceeding 60,000 wafers per month. For Tower, the deal provided significant capacity without building a new fab, using 300mm wafers that offer lower overhead and higher profitability.

Tower now says it transferred manufacturing processes originally developed at its Fab7 facility in Japan to New Mexico, qualified them and began serving customers. The company is currently moving those customers back to Fab7 in order to maintain supply continuity and service levels.

Record 2025 revenue

In the fourth quarter of 2025, Tower’s revenue grew about 14% year over year to approximately $440 million. Full-year 2025 revenue reached a record $1.57 billion, representing 9% growth compared with $1.44 billion in 2024. The company expects first-quarter 2026 revenue of about $412 million, roughly 15% growth year over year.

While the global semiconductor market expanded by more than 26% during this period, the primary growth driver was large advanced-node chips for data centers and AI — areas outside Tower’s core business.

Nearly $1 billion investment in capacity expansion

Tower is currently expanding manufacturing infrastructure for silicon photonics (SiPho) and silicon-germanium (SiGe) components, key technologies for communications and high-frequency RF applications. The company recently added another $270 million to the project, bringing total investment to about $920 million.

The goal is to complete installation and qualification by the fourth quarter of 2026 and begin full mass production in 2027. The project is expected to increase SiGe and SiPho production capacity fivefold compared with the fourth quarter of 2025.

Tower’s improving performance has been reflected in its stock price over the past year. The company now trades at roughly $140 per share on Nasdaq, compared with less than $50 a year ago. Even the dispute with Intel has not shaken the stock, which currently values Tower at about $15.1 billion.