Tower Posts Record Quarterly Revenue of $526 Million, Targets $600 Million in Q4
Key Facts
Tower Semiconductor posted record revenue of $526 million in the third quarter of 2026, up 33% from $396 million in the same period of 2025, according to a company statement. The company forecast fourth-quarter revenue of $600 million, plus or minus 5%. The midpoint implies annual growth of 36% and a quarterly increase of 14% from the third quarter. Tower said the forecast puts it on track for annual revenue of $2 billion in 2026 and an annualized revenue run rate of $2.4 billion based on its fourth-quarter forecast. The stock rose 4.5% in premarket trading on Monday, November 2, after the quarterly results were announced.
Profitability also improved. Gross profit reached $179 million, up 92% from $93 million in the third quarter of 2025, according to the results statement. Operating profit, excluding nonrecurring items, set a record at $127 million, compared with $51 million a year earlier. Net profit was $120 million, up from $54 million in the same period of the previous year. The company put its net profit margin at 23% and diluted earnings per share at $1.05. The figures show improvement extending from revenue to earnings, alongside guidance for higher revenue in the following quarter.
In August, Tower raised its 2028 business model to target revenue of $3.6 billion, gross profit of $1.63 billion and net profit of $1.2 billion. The company said the model update was in response to direct and growing customer demand. The revenue target corresponds to a gross profit margin target of 45%, while the target net profit margin is 33%, according to its disclosure. The model provides a longer-term framework than the fourth-quarter outlook and ties revenue and profitability targets to 2028. Tower also said it targets a $1.1 billion annualized silicon photonics revenue run rate in the fourth quarter of 2026, five times the activity's revenue in 2025.
The company is increasing production capacity alongside rising demand. It announced a capital investment of $920 million to expand silicon germanium and silicon photonics capabilities at facilities in Israel, Newport Beach, Texas and Japan. It said about 65% of the investment had been paid by the end of the third quarter, with the remaining 35% expected to be paid during the fourth quarter of 2026 and the first half of 2027. Cash from operating activities was $185 million in the third quarter, compared with $139 million a year earlier. In the same period, net investment in property and equipment was $191 million, versus $103 million in the third quarter of 2025. These investment outlays place part of the announced expansion alongside revenue growth, with spending on equipment and facilities continuing.
In Japan, Tower announced in July a two-track expansion to increase silicon photonics, silicon germanium and advanced packaging capacity, with support from the Japanese government. The company estimates its investment in the project at about $3 billion after accounting for expected government grants of $1 billion. The first track adds production capacity for 300-millimeter wafers, with full production readiness expected in the fourth quarter of 2027. The second track is planned next to Fab 7, and the company expects it to increase silicon photonics and silicon germanium capabilities several times over. Tower said customer demand is secured through signed contracts and agreements in advanced negotiation stages through 2029, while its first Japanese expansion targets the start of full production in the third quarter of 2027.
The chief executive said the company aims to enter 2027 while avoiding the usual seasonality in the year's first quarter, citing visibility into revenue and margin growth compared with the previous quarter. The statement follows fourth-quarter guidance, whose midpoint implies quarterly growth of 14%. The company also targets reaching an annualized revenue run rate of $2.4 billion by the end of 2026, according to its statements. In silicon photonics, the $1.1 billion target for the fourth quarter is a specific operating milestone within the broader 2028 model. Tower shares closed at $166.48 on October 30, according to EL7 data.