Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM) announced a deepening of its partnership with Canadian photonic quantum‑computing company Xanadu, building on prior joint tape‑outs that tested and refined Xanadu’s designs on Tower’s process flows. The two firms will co‑engineer a custom silicon‑photonic stack designed to support fault‑tolerant quantum computers, leveraging Tower’s high‑volume silicon‑photonics platform and Xanadu’s architectural breakthroughs.
The collaboration is a major operational milestone that positions Tower as a key supplier in the emerging quantum‑hardware market. By integrating Xanadu’s monolithic laser technology with Tower’s silicon‑photonics manufacturing, the partnership aims to deliver a scalable, high‑performance platform for large‑scale quantum information processing, a segment that offers high margins and strong growth prospects.
Tower’s financial performance underscores the strategic rationale for the partnership. In Q4 2025, the company reported revenue of $440.21 million and a net profit of $80.1 million, with an adjusted EPS of $0.78—an EPS beat of $0.13 (20%) over consensus and a revenue beat of $0.4 million (0.09%) over expectations. The full‑year 2025 results were revenue $1.57 billion and net profit $220.5 million, a 9% year‑over‑year increase. The Q4 2024 EPS of $0.59 provides a baseline that highlights the acceleration in earnings momentum.
The EPS beat was driven by disciplined cost management and operational leverage in Tower’s high‑growth silicon‑photonics and silicon‑germanium (SiGe) businesses. Revenue growth was supported by strong demand in core segments—particularly AI, 5G, automotive electrification, and data‑center interconnects—while the company’s investment of $650 million through mid‑2026 in SiPho and SiGe capacity is expected to sustain this momentum.
Segmentally, Tower’s product lines include SiGe, RF‑CMOS, BiCMOS, mixed‑signal/CMOS, image sensors, non‑volatile memory (NVM), and power‑management platforms. Silicon photonics revenue is targeted to exceed $220 million for 2025, more than doubling the 2024 figure, reflecting the company’s focus on high‑margin, high‑growth markets. The partnership with Xanadu complements this strategy by extending Tower’s silicon‑photonics expertise into quantum computing, a next‑generation computing architecture.
Christian Weedbrook, Founder and CEO of Xanadu, stated: "Our work with Tower has been instrumental in moving our hardware from concept to prototype to demonstrator systems within a scalable manufacturing environment. By combining our architectural breakthroughs, fabrication process engineering and design innovations with Tower's world‑class technology and manufacturing expertise, we are building the foundation for a truly useful quantum computer."
Dr. Ed Preisler, Vice President and General Manager of Tower Semiconductor’s RF Business Unit, said: "Xanadu is advancing one of the most scalable quantum architectures in the industry, and we're pleased to deepen our collaboration to support manufacturable scale. This reinforces the broad applicability of our platform across multiple advanced domains including quantum computing, data centers, telecom and automotive applications."
The announcement was well received by investors, reflecting confidence in Tower’s ability to execute on its high‑growth strategy and to capitalize on the expanding quantum‑computing market.
The partnership represents a strategic pivot that expands Tower’s portfolio into a high‑margin, high‑growth sector, reinforcing its position as a leading specialty foundry in silicon‑photonics and related advanced technologies.
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