Tower Semiconductor shares surged in premarket trading after the company announced a major expansion in Japan backed by government funding. Nasdaq-listed shares rose over 18% to $271.90, extending a 95% gain year-to-date.

The Israeli chip manufacturer plans to invest $3 billion to expand production of silicon photonics and silicon germanium chips in Japan, with $1 billion coming from a Japanese government grant. The chips serve fiber-optic and cellular networks, strengthening Japan's domestic semiconductor supply amid a global race for onshore capacity.

Following the investment, Tower upgraded its long-term financial targets. The company now projects $3.6 billion in revenue and $1.2 billion in net profit by 2028, up significantly from its prior forecast of $2.8 billion in revenue and $750 million in net profit.