Tower Semiconductor said on Monday, 2 November, that it targets an annualized $1.1 billion run rate of silicon photonics (SiPho) revenue in the fourth quarter of 2026, which it describes as 5X its 2025 SiPho annual revenue. That implies 2025 SiPho revenue of about $220 million, by our arithmetic.
The Israeli chipmaker reported record third-quarter revenue of $526 million, up 33% from $396 million a year earlier, and guided fourth-quarter revenue to $600 million, with an upward or downward range of 5%, according to its results release filed with the SEC.
The key insight: Tower Semiconductor targets an annualized $1.1 billion silicon photonics run rate in the fourth quarter, which it calls 5X its 2025 SiPho revenue, and guides fourth-quarter revenue to $600 million after a record $526 million third quarter.
Gross profit was a record $179 million, 92% higher than $93 million in the third quarter of 2025, the release says. That is 34% of revenue, against 23% a year earlier, by our arithmetic.
Operating profit was a record $127 million, excluding non-recurring items, and net profit was $120 million, or $1.05 per diluted share, on the same basis. Cash from operating activities was $185 million, and investments in property and equipment, net, were $191 million, up from $103 million a year earlier.
The mid-range of the fourth-quarter guidance is 36% higher than a year earlier and 14% higher than the third quarter, Tower says. Chief executive Russell Ellwanger said the company would close the year “at $2 billion annual revenue and a $2.4 billion annualized revenue run rate”.
Left: Tower Semiconductor’s targeted fourth-quarter 2026 annualized silicon photonics run rate of $1.1 billion, which it describes as 5X its 2025 SiPho annual revenue (about $220 million, our arithmetic). Right: quarterly revenue of $396 million in Q3 2025 and $526 million in Q3 2026, and fourth-quarter guidance of $600 million. Source: Tower Semiconductor Form 6-K, 2 November 2026.
Where the Growth Comes From
Ellwanger said “infrastructure (SiPho and SiGe) demand specifically is driving exceptional growth in our high-speed connectivity business”.
The $1.1 billion SiPho target would be about 46% of the $2.4 billion annualized revenue run rate Tower gives for the fourth quarter, by our arithmetic. Tower said its capacity investments, including the Track-1 Japan 300mm buildout, are “progressing ahead of schedule, supported by customer contracts which are being extended through 2029”.
The release’s risk language refers to “SiPho customer prepayments received for certain minimum capacity commitments”.
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Connecting the Coverage
Earlier on Monday we reported a Nomura estimate that shipments of laser chips for optical communications will rise from 480 million units in 2026 to 1.542 billion in 2028, in Nomura sees optical laser chips tripling to 1.5B by 2028.
As we read the release, silicon photonics is becoming a large share of Tower’s business: the $1.1 billion SiPho target is about 46% of the $2.4 billion annualized run rate it gives for the fourth quarter, by our arithmetic.
As we read the margin lines, gross profit grew faster than revenue: it rose 92% while revenue rose 33%, taking gross profit to 34% of revenue from 23%, by our arithmetic.
Russell Ellwanger, Chief Executive Officer, Tower Semiconductor, 2 November 2026
“We are entering the strongest growth phase in our history, according to fourth quarter guidance”
Three Implications
FOR OPTICAL-COMPONENT BUYERS Tower says its capacity investments, including the Track-1 Japan 300mm buildout, are progressing ahead of schedule, supported by customer contracts being extended through 2029.
FOR TOWER SHAREHOLDERS Tower guides fourth-quarter revenue to $600 million, with an upward or downward range of 5%, a mid-range 36% higher than a year earlier, according to the release.
FOR CAPACITY PLANNERS Investments in property and equipment, net, were $191 million in the third quarter, up from $103 million a year earlier, the release shows.
The framework argues: “This is not a continuation of the cloud capex cycle. This is a different cycle, with different physics.”
As we read it, Tower’s SiPho target sits in the connectivity layer of that cycle: the chips that link servers, which Tower says are driving exceptional growth in its high-speed connectivity business. The framework is the owner’s argument and does not discuss Tower.
The $1.1 billion is a fourth-quarter annualized target, not reported revenue, and Tower does not give a dollar figure for 2025 SiPho revenue; the $220 million is our arithmetic from its 5X ratio. The release does not name the SiPho customers or split revenue by end market.
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Tower targets a $1.1 billion annualized silicon photonics run rate in the fourth quarter, five times its 2025 SiPho revenue, after a record $526 million quarter and a $600 million fourth-quarter guide.
A note on sourcing. This piece relies on Tower Semiconductor’s third-quarter results release, filed with the SEC on Form 6-K on 2 November 2026. The $220 million, 46%, 34% and 23% figures are our arithmetic from the company’s numbers.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
