Tower Semi and Semtech expand SiGe deal for AI data centre links
Tower Semiconductor and Semtech Corporation have expanded their silicon germanium (SiGe) manufacturing partnership under a new multi-year agreement, securing dedicated foundry capacity across Tower's fab network in the United States, Israel and Japan. The deal, which extends a relationship the two companies say spans twenty years, is designed to give Semtech guaranteed supply headroom as demand for its AI data-centre interconnect components accelerates.
Semtech's signal integrity product line, built on Tower's SiGe process, covers transimpedance amplifiers (TIAs), modulator and laser drivers, and linear equaliser ICs. These components sit at the analogue front end of optical and copper interconnect links, converting and conditioning high-speed signals in fully retimed optics, linear pluggable optics, near-packaged optics, and active copper cables. The companies are targeting successive speed generations: 800G and 1.6T are in production today, with 3.2T and beyond on the joint technology roadmap.
The expanded agreement follows Semtech's receipt of the Optical Component Innovation award at the European Conference on Optical Communication (ECOC) 2026, recognising its 224 Gbps per lane TIA family for linear pluggable optics fabricated on Tower's SiGe platform.
The deal
Semtech chief executive Hong Hou said the partnership reflects how connectivity has become a limiting factor in AI system scaling. "Our customers are scaling interconnect bandwidth quickly and at massive scale," he said. "Meeting that demand requires long-term capacity planning and commitment with our manufacturing partners."
Tower chief executive Russell Ellwanger described the expanded arrangement as platform-level collaboration, noting that qualifying solutions ahead of market need positions both companies to capture volume as each interconnect generation arrives. Neither company disclosed the financial value of the capacity commitment or the terms under which reserved fab time would be paid for or clawed back if demand falls short.
The geographic spread of the secured capacity, spanning Tower's 200mm lines in the US and Israel and its 200mm and 300mm capacity in Japan through its 51% stake in TPSCo, is notable. It reduces Semtech's single-region concentration risk at a time when semiconductor supply chains remain a boardroom concern following export-control actions and geopolitical disruption over recent years.
Market context
The AI infrastructure build-out is placing sustained pressure on optical interconnect suppliers. As GPU clusters scale from individual racks to multi-campus deployments, the energy cost of moving data between accelerators has grown relative to the cost of the compute itself, pushing hyperscalers and co-location operators to demand ever-higher bandwidth per watt from their optics and copper link suppliers.
Semtech is not without competition in this space. Marvell Technology, Broadcom and a number of Asian analogue IC houses are active across the same TIA and laser-driver segments. The ECOC award provides third-party validation for Semtech's 224 Gbps per lane design, but buyers at volume will weigh total link power, bit-error rate under temperature and supply continuity when making component selections.
Tower's position as an analogue-specialist foundry, rather than a leading-edge logic fab, means it is less exposed to the capacity queues affecting advanced node suppliers, though it competes with GlobalFoundries and other analogue-focused fabs for differentiated process business. A joint technology roadmap that spans multiple speed generations gives Tower a degree of revenue predictability that pure-play foundry agreements rarely provide.
Investors in both companies will look for Semtech to convert its stated design-win pipeline into booked revenue, and for Tower to demonstrate that the additional capacity is utilised rather than reserved, as the AI data-centre interconnect market moves through its current investment cycle.