STMicroelectronics is weighing a significant decision regarding the expansion of its Crolles fabrication facility in France, anticipated by the end of 2026. The company faces a pressing need to boost production capacity for silicon photonics chips, which are essential for swift data transfer in AI data centers. The current production capabilities are projected to sustain operations until 2028.
On June 2, the CEO provided an update on the company's aims. STMicroelectronics has revised its revenue forecast for data centers in 2026, raising the target from over $500 million to approximately $1 billion. The company aims for a 30% market share in crucial silicon photonics segments. This ambitious projection is supported by the high-volume production of its PIC100 silicon photonics platform that began in March 2026 at Crolles. The PIC100 is noteworthy for its impressive data rates of 800 Gb/s and 1.6 Tb/s per optical module, with plans to increase production capacity significantly by 2027.
Why is the Crolles facility essential for STMicroelectronics and beyond? Crolles operates as the primary European hub for advanced manufacturing and research, featuring both 200 mm and 300 mm fabrication lines. The 300 mm line is vital, facilitating the silicon photonics and BiCMOS processes that are central to the company’s strategies in AI data centers. Furthermore, in February 2026, STMicroelectronics entered a multi-year supply agreement with AWS, worth over $1 billion, to provide data center chips.
The current developments surrounding near-package optics applications deserve attention as well. This innovative approach places photonic components in proximity to compute chips, minimizing latency and power loss. The potential for the PIC100 platform to serve in this capacity indicates a promising future in the field.
For investors, the significant shift in revenue targets—from $500 million to $1 billion in a single update—signals a critical inflection point in the silicon photonics business. The agreement with AWS enhances revenue visibility but presents concentration risks. If one customer dominates the billion-dollar target, any changes in their strategic direction could significantly impact STMicroelectronics.
The impending decision by year-end will clarify whether the existing infrastructure can meet evolving demand or if an expansion is imperative for future growth.