Israeli chip manufacturer Tower Semiconductor exceeded Wall Street expectations Wednesday, projecting stronger-than-anticipated second-quarter earnings while announcing $1.3 billion in contracts to produce specialized chips for artificial intelligence data centers through 2027.
The contract chipmaker’s stock surged more than 17% in pre-market trading after reporting robust demand for its analog and mixed-signal processors, driven by increased investment in AI infrastructure and data center technology.
Tower Semiconductor manufactures integrated circuits for diverse sectors including automotive, industrial applications, consumer electronics, and communications technology.
The company projected second-quarter earnings of $455 million, surpassing Wall Street analysts’ consensus estimate of $436.4 million based on LSEG data.
Beyond the revenue forecast, Tower Semiconductor revealed it secured silicon photonics contracts valued at $1.3 billion for 2027 delivery and collected $290 million in upfront customer payments to guarantee manufacturing capacity. The company noted that clients have pledged additional orders for 2028, with further advance payments scheduled by January 2027.
“We are confident in our path toward achieving our financial model targets of $2.8 billion in annual revenue and $750 million in net profit in 2028,” CEO Russell Ellwanger said.
Tower Semiconductor’s first-quarter performance showed a 15% increase in revenue reaching $414 million, exceeding projections of $411 million. The company’s adjusted earnings per share hit 65 cents, outperforming analyst expectations of 56 cents.
However, Tower faces legal challenges as competitor GlobalFoundries filed a lawsuit in March, claiming the Israeli manufacturer violated 11 patents connected to smartphone and electronics chip production processes.
