Tower Semiconductor Ltd. (NASDAQ:TSEM) shares gained nearly 6% in pre-market trading Wednesday after the company posted record fourth-quarter 2025 revenue that topped Wall Street expectations, supported by strong growth in silicon photonics and improving margins.
The specialty foundry reported Q4 revenue of $440.2 million, ahead of the $434.2 million consensus estimate. Sales increased 14% year over year and 11% sequentially. Adjusted earnings per share came in at $0.78, comfortably above the $0.69 analysts had projected. For full-year 2025, revenue rose 9% to $1.57 billion from $1.44 billion in 2024.
“We ended 2025 having achieved our highest-ever quarterly revenue with a substantial increase in profitability,” said Russell Ellwanger, CEO of Tower Semiconductor. “This was driven by a strong base where each of our key technology platforms provided growth, combined with exceptional performance and strong incremental margins of our market-leading SiPho platforms.”
Investors also reacted positively to the company’s expansion plans. Tower said it will invest an additional $270 million to expand its silicon photonics capacity and capabilities, lifting total SiPho and SiGe investments to $920 million. The company plans to scale its SiPho wafer capacity to more than five times its Q4 2025 shipment run-rate by Q4 2026, with over 70% of that capacity already reserved or in process through 2028 and supported by customer prepayments.
For the first quarter of 2026, Tower forecast revenue of $412 million, plus or minus 5%, implying roughly 15% year-over-year growth.
However, results were partly tempered by disclosure that Intel has indicated it does not intend to proceed under a 300mm wafer manufacturing agreement signed in September 2023. The companies are now in mediation, and Tower is redirecting affected customer volumes to its Fab7 facility in Japan.