STMicroelectronics plans Crolles fab expansion by 2026 as AI optics demand rises

STMicroelectronics is preparing to make a pivotal call on whether to expand its flagship Crolles fabrication facility in France, with a decision expected by the end of 2026. The catalyst is straightforward: demand for silicon photonics chips, the kind that shuttle data around AI data centers at the speed of light, is growing faster than the company’s current capacity can handle.

CEO Jean-Marc Chery laid out the timeline on June 2, noting that existing infrastructure at Crolles can sustain silicon photonics operations through 2027 and into early 2028.

From $500 million to $1 billion, in one guidance update

STMicroelectronics upgraded its 2026 data-center revenue target to approximately $1 billion, up from a previous estimate of over $500 million. The company is also targeting roughly 30% market share in key silicon photonics segments.

STMicroelectronics kicked off high-volume production of its PIC100 silicon photonics platform in March 2026 at Crolles. The platform supports data rates of 800 Gb/s and 1.6 Tb/s per optical module, and the company has plans to quadruple PIC100 production capacity by 2027.

Why Crolles matters beyond STMicro

The Crolles facility serves as STMicroelectronics’ primary European hub for advanced manufacturing and research, housing both 200 mm and 300 mm fabrication lines. The 300 mm line handles the silicon photonics and BiCMOS processes central to the company’s AI data-center play.

STMicroelectronics signed a multi-year supply agreement with AWS in February 2026, valued at over $1 billion, specifically for data-center chips.

Chery’s comment about near-package optics applications is worth noting. Near-package optics places photonic components directly next to or on top of compute chips rather than in separate modules at the end of a fiber cable, which can reduce latency and power loss. STMicro has indicated the PIC100 platform has potential for this emerging use case.

What this means for investors

The revenue doubling from $500 million to $1 billion in a single guidance update suggests the silicon photonics business is inflecting. The AWS supply agreement provides a degree of revenue visibility, though concentration risk cuts both ways: if a single hyperscaler represents a disproportionate share of the billion-dollar target, any shift in that customer’s roadmap creates outsized exposure.

The decision by year-end will indicate whether the current infrastructure runway through early 2028 is sufficient or whether an expansion is required to meet demand.