Tower Semiconductor with METI Support Announces Strategic Capacity Expansion in Japan

Sig ifica t Multiples of Silico Photo ics a d Silico Ge ma ium Capacity to Suppo t Accele ati g Custome Dema d

MIGDAL HAEMEK, Is ael, July 14, 2026 – Towe Semico ducto (NASDAQ/TASE: TSEM), a leadi g fou d y of high-value a alog semico ducto solutio s, today a ou ced a pa allel dual-t ack st ategic expa sio of its 300mm Silico Photo ics (SiPho), Silico Ge ma ium (SiGe), a d adva ced packagi g capabilities i Japa , with suppo t f om the Gove me t of Japa . The expa sio is desig ed to suppo t the apidly g owi g lo g-te m custome dema d, substa tially i c easi g the Compa y’s ma ufactu i g capacity a d exte di g its tech ology leade ship.

Russell Ellwa ge , Towe ’s CEO, stated: “We a e ho o ed a d app eciative that the Gove me t of Japa has selected Towe to lead the expa sio of these st ategically impo ta t tech ologies. Togethe , we a e buildi g a globally diffe e tiated ce te of excelle ce fou ded o tech ology leade ship, ma ufactu i g excelle ce, a d exceptio al p oduct quality.

Si ce becomi g the majo ity ow e of the fo me Pa aso ic Semico ducto ma ufactu i g ope atio s, ow TPSCo, this g oup has established a eputatio fo t a sfo mi g cutti g-edge i ovatio i to high-volume ma ufactu i g excelle ce. Fo these easo s, with the suppo t of the Gove me t of Japa , we will c eate a globally diffe e tiated, adva ced R&D a d ma ufactu i g ce te of excelle ce fo Silico Photo ics, Silico Ge ma ium, a d adva ced optical packagi g of ve y sig ifica t scale.

By combi i g Towe ‘s specialized tech ology leade ship with Japa ‘s u pa alleled ma ufactu i g expe tise, wo ld-class esea ch i stitutio s, a d deeply committed wo kfo ce, we a e buildi g a st ategic platfo m that will d ive i ovatio , eco omic g owth, a d semico ducto leade ship fo decades to come.”

T ack o e adds sig ifica t ew 300mm Silico Photo ics capacity, with full p oductio eadi ess expected du i g the fou th qua te of 2027. It co sists of epu posi g the A ai facility, fo me ly Fab 6, fo 300mm Silico Photo ics capacity a d adva ced packagi g capabilities, maximizi g the Compa y’s Fab 7 300mm output i Uozu. Reflecti g upo the t ack o e g owth outlook, Towe is updati g its busi ess model, ta geti g to achieve $3.6 billio of eve ue a d $1.2 billio of et p ofit i 2028.

T ack two will comme ce i pa allel with the fi st t ack a d co sists of co st ucti g a additio al 300mm ma ufactu i g facility, adjace t to Fab 7, followi g sig i g a d closi g of elated ag eeme ts. This facility is expected to p ovide a multi-fold i c ease i Silico Photo ics a d Silico Ge ma ium capacity, positio i g Towe to suppo t co ti ued accele ati g custome dema d fo eme gi g AI a d data ce te applicatio s, d ivi g ext-ge e atio optical co ectivity equi eme ts.

As a esult of expa ded custome e gageme ts, a d sig ifica t tech ical milesto es achieved th ough multi-ge e atio st ategic pa t e ships, the ew facility is expected to be highly acc etive begi i g i 2029, demo st ati g st o g leade ship i the optical space, p omoti g lo g-te m employee p ide a d st o g custome satisfactio , with a busi ess model e su i g lo g-te m viability.

The scope of the dual-t ack expa sio is fo ecasted to be a app oximate $3 billio Towe ’s i vestme t, et of g a ts of $1 billio , to be p ovided by the Gove me t of Japa . This i vestme t c eates lo g-te m value fo both Towe a d Japa by establishi g adva ced domestic ma ufactu i g capabilities i Silico Photo ics a d Silico Ge ma ium, st e gthe i g Japa ’s semico ducto ecosystem a d supply chai esilie ce.

Ellwa ge fu the added: “Buildi g o ou lo g-sta di g elatio ships with Toyama a d Niigata P efectu es a d suppo ted by ou sig ifica t i vestme ts i the Uozu a d A ai facilities, we look fo wa d to deepe i g ou collabo atio to st e gthe egio al semico ducto i f ast uctu e, expa d local supply-chai capabilities, accele ate i ovatio , developi g the ext ge e atio of highly skilled e gi ee i g a d ma ufactu i g tale t, a wo kfo ce e ow ed fo its commitme t, i dividual ow e ship, dedicatio a d loyalty.

Towe is dedicated to sustai i g a d c eati g high-quality employme t, ec uiti g, developi g, a d etai i g wo ld-class e gi ee i g a d ma ufactu i g tale t, expa di g collabo atio with local supplie s a d busi esses, a d deepe i g pa t e ships with Japa ese u ive sities a d esea ch i stitutio s. By st e gthe i g these i dust ial a d academic ecosystems, Towe seeks to d ive i ovatio , e ha ce egio al competitive ess, a d co t ibute to the sustai able g owth a d lo g-te m eco omic developme t of both p efectu es.”

Ellwa ge co cluded: “The fi st t ack esults i substa tial i c eases i ou updated 2028 busi ess model. By quickly a d efficie tly addi g capacity to a existi g p ofitable ope atio , t ack two elimi ates the timi g co ce s a d impacts of multi cycles of lea i g fo a g ee field qualificatio o a fab-to-fab p oduct t a sfe , e su i g o schedule custome amps a d cash flow. We a ticipate t ack two to p ovide the path fo co ti ued g owth fa beyo d 2028.”

About Towe Semico ducto

Towe Semico ducto Ltd. (NASDAQ/TASE: TSEM), the leadi g fou d y of high-value a alog semico ducto solutio s, p ovides tech ology, developme t, a d p ocess platfo ms fo its custome s i g owi g ma kets such as co sume , i dust ial, automotive, mobile, i f ast uctu e, medical a d ae ospace a d defe se. Towe Semico ducto focuses o c eati g a positive a d sustai able impact o the wo ld th ough lo g-te m pa t e ships a d its adva ced a d i ovative a alog tech ology offe i g, comp ised of a b oad a ge of customizable p ocess platfo ms such as SiPho, SiGe, BiCMOS, mixed-sig al/CMOS, RF CMOS, CMOS image se so , o -imagi g se so s, displays, i teg ated powe ma ageme t (BCD a d 700V), a d MEMS. Towe Semico ducto also p ovides wo ld-class desig e ableme t fo a quick a d accu ate desig cycle as well as p ocess t a sfe se vices i cludi g developme t, t a sfe , a d optimizatio , to IDMs a d fabless compa ies. To p ovide multi-fab sou ci g a d exte ded capacity fo its custome s, Towe Semico ducto cu e tly ow s o e ope ati g facility i Is ael (200mm), two i the U.S. (200mm), a d two i Japa (200mm a d 300mm) which it ow s th ough its 51% holdi gs i TPSCo a d sha es a 300mm facility i Ag ate, Italy with STMic oelect o ics. Fo mo e i fo matio , please visit: www.towe semi.com.

Fo wa d-Looki g Stateme tsThis elease, as well as othe stateme ts a d epo ts filed, stated a d published, i clude ce tai “fo wa d-looki g” stateme ts withi the mea i g of Sectio 21E of the Secu ities Excha ge Act of 1934, as ame ded. These fo wa d-looki g stateme ts i clude, amo g othe s, p ojectio s a d stateme ts with espect to ou futu e busi ess, fi a cial pe fo ma ce a d activities. The use of wo ds such as “p ojects”, “expects”, “may”, “ta gets”, “pla s”, “fo ecast”, “i te ds”, “committed to”, “t acki g”, o va iatio s o wo ds of simila impo t, may ide tify a stateme t as “fo wa d-looki g.” Howeve , the abse ce of these wo ds does ot mea that a stateme t is ot fo wa d-looki g. Actual esults may va y f om those p ojected o implied by such fo wa d-looki g stateme ts a d you should ot u duly ely o such fo wa d-looki g stateme ts, which speak o ly as of the date of this elease. Facto s that could cause actual esults to diffe mate ially f om those p ojected o implied by such fo wa d-looki g stateme ts i clude, without limitatio , isks a d u ce tai ties associated with: (i) fluctuati g dema d i ou custome s’ e d ma kets a d/o SiPho, SiGe a d othe custome dema d may ot i c ease to the levels cu e tly fo ecasted by the Compa y, (ii) elia ce o acquisitio s, establishi g ew fabs a d/o gai i g additio al capacity fo g owth, (iii) difficulties i achievi g acceptable ope atio al met ics a d i dices as a esult of ope atio al, tech ological o p ocess- elated p oblems, (iv) ide tifyi g a d egotiati g with thi d-pa ty buye s fo the sale of a y excess a d/o u used equipme t, i ve to y a d/o othe assets, (v) mai tai i g cu e t key custome s a d att acti g ew key custome s, (vi) ove dema d fo ou fou d y se vices a d/ o p oducts that may esult i ope atio al bottle ecks, exte d cycle times, educe yield, delay delive y schedules, that may esult i compe satio , pe alties a d/ o p epayme t epayme ts, loss of custome s, eve ues, p ofits a d/ o eputatio , i cludi g with espect to SiPho custome p epayme ts eceived fo ce tai mi imum capacity commitme ts, due to i ability to fulfill, i whole o i pa t, all such dema d a d commitme ts i a timely ma e o at all, (vii) fluctuatio of ou fi a cial esults f om qua te to qua te , (viii) the additio al 300mm ma ufactu i g facility the Compa y pla s to establish adjace t to Fab 7 a d maximizatio of the Compa y’s Fab 7 300mm output (i cludi g isks associated with the epu posi g of the A ai facility), i cludi g isks associated with delays i co st uctio pe iod a d cost, obtai i g ecessa y equipme t a d/ o obtai i g ecessa y pe mits, Gove me t of Japa a d/o METI g a ts te ms a d cove a ts the eto (which may esult i loss of a po tio o all of the g a t fu ds), a d/ o othe co se ts equi ed, a d the egotiatio of defi itive ag eeme ts with ve do s a d othe s, that may esult i lowe p ofitability tha cu e tly expected a d/ o added costs a d losses, lo ge etu o i vestme t pe iod, i cludi g isks associated with the ability to obtai a y fi a ci g equi ed to fu d the establishme t, facilities a d machi e y cost et i vestme ts o favo able te ms, o at all, (ix) ou debt a d othe liabilities may impact ou fi a cial positio a d ope atio s, (x) ou ability to successfully execute acquisitio s, i teg ate them i to ou busi ess, utilize ou expa ded capacity a d fi d ew busi ess, (xi) fluctuatio s i cash flow, (xii) ou ability to satisfy the cove a ts stipulated i ou ag eeme ts with ou debt holde s a d/ o possible i cu e ce of additio al i debted ess, (xiii) pe di g litigatio , (xiv) meeti g the co ditio s set i app oval ce tificates a d othe egulatio s u de which we eceived g a ts a d/o oyalties a d/o a y type of fu di g f om the Is aeli, US a d/o Japa gove me tal age cies, (xv) eceipt of o de s that a e lowe tha the custome pu chase commitme ts o fo ecast a d/o failu e to eceive custome o de s cu e tly expected, (xvi) the effects of global ecessio , c edit c isis a d/o u favo able mac o-eco omic co ditio s, such as the impositio of egulato y equi eme ts, ta iffs, impo t a d expo t est ictio s a d othe t ade ba ie s a d est ictio s, i cludi g the timi g a d availability of expo t lice ses a d pe mits, (xvii) ou ability to accu ately fo ecast fi a cial pe fo ma ce, which is affected by limited o de backlog a d le gthy sales cycles which may cause fi a cial esults to fluctuate f om qua te to qua te , (xviii) possible situatio s of obsolete i ve to y o ove capacity if fo ecasted dema d exceeds actual dema d whe we c eate i ve to y befo e eceipt of custome o de s, (xix) the cyclical atu e of the semico ducto i dust y a d the esulti g pe iodic ove capacity, fluctuatio s i ope ati g esults a d futu e ave age selli g p ice e osio , (xx) capacity a d capability expa sio a d acquisitio elated t a sactio s i ou existi g fab icatio s, st ategic a d/o othe i -o ga ic capacity a d/ o capability g owth a d/ o M&A t a sactio s a d oppo tu ities, a d/ o the acquisitio of a d/ o the establishme t of a ew facto y o facto ies, i cludi g the additio al 300mm ma ufactu i g facility the Compa y pla s to establish adjace t to Fab 7 a d maximizatio of the Compa y’s Fab 7 300mm output (i cludi g isks associated with the epu posi g of the A ai facility), which could equi e fu di g eeds beyo d ou existi g cash, the availability of which ca ot be assu ed o favo able te ms, if at all, a d which may have adve se impact o the ma ket value of the Compa y a d the p ice of the Compa y’s o di a y sha es, (xxi) ope ati g ou facilities at sufficie t utilizatio ates ecessa y to ge e ate a d mai tai positive a d sustai able g oss, ope ati g a d et p ofit, (xxii) the pu chase of equipme t a d/o aw mate ial (i cludi g pu chases u de committed co t acts), the timely completio of the equipme t i stallatio , tech ology t a sfe a d aisi g the fu ds the efo , (xxiii) p oduct etu s a d defective p oducts, (xxiv) ou ability to mai tai a d develop ou tech ology p ocesses a d se vices to keep pace with ew tech ology, i cludi g a tificial i tellige ce, evolvi g sta da ds, cha gi g custome a d e d-use equi eme ts, ew p oduct i t oductio s a d sho t p oduct life cycles, (xxv) competi g effectively, (xxvi) ou depe de ce o i c eased use of outsou ced fou d y se vices fo specialty p ocess tech ologies, (xxvii) ou depe de ce o i tellectual p ope ty ights of othe s, ou ability to ope ate ou busi ess without i f i gi g othe s’ i tellectual p ope ty ights a d ou ability to e fo ce ou i tellectual p ope ty agai st i f i geme t, i cludi g isks a d u ce tai ties associated with the th ee i f i geme t claims that the Compa y is cu e tly pa ty to, b ought by GlobalFou d ies allegi g i f i geme t of ce tai of its pate ts, (xxviii) Fab 3 la dlo d’s alleged claims ega di g oise abateme t a d equest fo judicial decla atio of mate ial o -cu able b each of the Fab3 lease, a d i additio , claims by a thi d-pa ty with whom the la dlo d is e gaged pe tai i g to the Fab3 site, whe e such thi d pa ty believes he has ce tai ights with espect to the lease exte sio , (xxix) ete tio of key employees a d ec uitme t a d ete tio of skilled qualified pe so el, (xxx) exposu e to i flatio , cu e cy ates (mai ly the Is aeli Shekel a d the Japa ese Ye ) a d i te est ate fluctuatio s a d isks associated with doi g busi ess locally a d i te atio ally, as well as fluctuatio s i the ma ket p ice of ou t aded secu ities, (xxxi) meeti g egulato y equi eme ts wo ldwide, i cludi g expo t, e vi o me tal a d gove me tal egulatio s, as well as isks elated to i te atio al ope atio s, (xxxii) e gageme ts fo fab establishme t, joi t ve tu e a d/o capital lease t a sactio s fo capacity e ha ceme t i adva ced tech ologies, i cludi g isks a d u ce tai ties associated with the Ag ate fab, such as its qualificatio schedule, tech ology, equipme t a d p ocess qualificatio , facility ope atio al amp-up, custome e gageme ts, cost st uctu e, equi ed i vestme ts a d othe te ms, which may equi e additio al fu di g to cove sig ifica t capacity i vestme t eeds a d othe payme ts, (xxxiii) pote tial liabilities, cost a d othe impact due to eo ga izatio a d co solidatio of fab icatio facilities, o cessatio of ope atio s, (xxxiv) pote tial secu ity, cybe a d p ivacy b eaches, (xxxv) wo kfo ce that is ot u io ized which may become u io ized, a d/o wo kfo ce that is u io ized a d may take actio such as st ikes that may c eate i c eased cost a d ope atio al isks, (xxxvi) the issua ce of o di a y sha es as a esult of exe cise a d/o vesti g of a y of ou employee equity, as well as a y sale of sha es by a y of ou sha eholde s, o a y ma ket expectatio the eof, as well as the issua ce of additio al employees’ est icted stock u its, o a y ma ket expectatio the eof, which may dep ess the ma ket value of the Compa y a d the p ice of the Compa y’s o di a y sha es, a d i additio may impai ou ability to aise futu e capital, (xxxvii) the dispute esolutio p ocess with i volvi g I tel’s dete mi atio ot to pe fo m its ag eeme t to build a capacity co ido to e able I tel to ma ufactu e wafe s fo Towe ’s custome s, which p ocess may be costly a d/ o may esult i losses a d/o othe adve se impact, (xxxviii) Pilla Two tax ules a d egulatio s p eviously eleased by the OECD, which equi e a mi imum effective co po ate i come tax ate of 15% applicable i eve y ju isdictio i which the compa y ope ates, which will esult i additio al i come tax expe ses fo the yea s 2026 a d beyo d, mai ly with espect to the Compa y’s Is aeli ope atio s i which the Compa y was subject to 7.5% p efe ed tax ate u til 2025 u de Is aeli laws, a d (xxxix) climate cha ge, busi ess i te uptio s due to floods, fi es, pa demics, ea thquakes a d othe atu al disaste s, the secu ity situatio i Is ael a d global t ade “wa ”, i cludi g the pote tial i ability to co ti ue u i te upted ope atio s of the Is aeli fab, impact o global supply chai to a d f om the Is aeli fab, delays i the delive y, i stallatio a d qualificatio of equipme t, powe i te uptio s, chemicals o othe leaks o damages as a esult the ef om, abse ce of wo kfo ce due to milita y se vice as well as isk that ce tai cou t ies will est ict doi g busi ess with Is aeli compa ies, i cludi g imposi g est ictio s due to hostilities i Is ael o political i stability i the egio that may co ti ue o exace bate, a d othe eve ts beyo d ou co t ol. Due to hostilities a d i stability i eighbo i g states, Is ael could be subject to additio al political, eco omic, a d milita y co fi es, a d ou Is aeli facility’s ope atio s could be mate ially adve sely affected. A y cu e t o futu e hostilities i volvi g Is ael o the i te uptio o cu tailme t of t ade betwee Is ael a d its p ese t t adi g pa t e s, o a sig ifica t dow tu i the eco omic o fi a cial co ditio of Is ael, could have a mate ial adve se effect o ou busi ess, fi a cial co ditio a d esults of ope atio s.

A mo e complete discussio of isks a d u ce tai ties that may affect the fo wa d-looki g stateme ts i cluded i this elease o which may othe wise affect ou busi ess is i cluded u de the headi g “Risk Facto s” i the Compa y’s most ece t fili gs o Fo ms 20-F a d 6-K, as we e filed with the SEC a d the Is ael Secu ities Autho ity. Futu e esults may diffe mate ially f om those p eviously epo ted. The Compa y does ot i te d to update a d exp essly disclaims a y obligatio to update o evise a y fo wa d-looki g i fo matio co tai ed i this elease to eflect a y cha ges i expectatio s with ega d the eto, o a y cha ge i eve ts, co ditio s o ci cumsta ces o which a y such stateme t is based.

                                                ###Towe Semico ducto Compa y Co tact: O it Shaha | +972-74-7377440 | o itsha@towe semi.comTowe Semico ducto I vesto Relatio s Co tact: Liat Av aham | +972-4-6506154 | liatav a@towe semi.com

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