Tower Semiconductor Ltd(TSEM.US) and Semtech Corporation(SMTC.US) Expand Collaboration to Secure Silicon Germanium Capacity for AI Data Center Connectivity

Tower Semiconductor Ltd(TSEM.US) and Semtech Corporation(SMTC.US) announced that they are expanding their 20-year partnership through a multi-year agreement to secure dedicated silicon germanium manufacturing capacity for AI data center connectivity products. Under the agreement, Semtech Corporation will invest in dedicated capacity at Tower Semiconductor Ltd's wafer fabs in the United States, Israel, and Japan to support its optical and copper interconnect component needs. The two companies will also collaborate on developing next-generation data center connectivity technologies, including 800G, 1.6T, and 3.2T. The two companies said in a statement that as AI clusters expand from racks and rows of racks to campus-level scale, data transmission energy consumption is becoming a key factor constraining AI scaling. As speeds upgrade from 800G to 1.6T and 3.2T, higher requirements are placed on bandwidth, transmission distance, and power consumption per bit, which also increases the importance of high-speed analog front ends. Semtech CEO Hong Hou said that connectivity has become a key factor in the scalability of AI systems, and customers are increasing interconnect bandwidth on a large scale, necessitating long-term capacity planning. In Tuesday's U.S. pre-market session, as of press time, Tower Semiconductor Ltd rose 2%, while Semtech Corporation fell more than 3%.