Tower Semiconductor (NASDAQ:TSEM) and Semtech Corporation (NASDAQ:SMTC) have expanded their long-term manufacturing partnership through a new multi-year agreement designed to increase silicon germanium (SiGe) production capacity for advanced data centre connectivity products.
Announced on 13 October 2026, the agreement will provide Semtech with dedicated manufacturing capacity across Tower Semiconductor’s fabrication facilities in the United States, Israel and Japan.
The arrangement is intended to support growing demand for high-speed optical and copper interconnect technologies used in artificial intelligence infrastructure and data centres.
The expanded agreement builds on a partnership spanning approximately 20 years and includes plans to develop future generations of connectivity technology.
Financial details of the arrangement were not disclosed.
Under the expanded agreement, Semtech will secure dedicated SiGe manufacturing capacity at Tower Semiconductor facilities in three countries.
The geographical distribution is intended to improve supply resilience and provide additional manufacturing flexibility as demand for advanced data centre components increases.
SiGe semiconductor technology is used in high-frequency applications that require strong signal performance and efficient data transmission.
Semtech relies on Tower’s SiGe manufacturing processes for several products within its signal integrity portfolio, including transimpedance amplifiers, modulator drivers, laser drivers and linear equalizers.
These components support high-speed communications by processing, amplifying and maintaining electrical signals used in optical and copper interconnect systems.
The companies expect the additional manufacturing capacity to help Semtech meet future customer requirements while supporting the development of increasingly advanced data centre networks.
By securing production resources across multiple regions, Semtech also aims to reduce its dependence on individual manufacturing locations.
The manufacturing expansion covers several generations of high-speed interconnect technology.
The companies said the agreement will support current 800G and 1.6T connectivity products, as well as future technologies operating at 3.2T and higher speeds.
These advances are becoming increasingly important as artificial intelligence workloads create greater demand for high-bandwidth connections between computing systems.
Modern AI data centres require large volumes of information to move between processors, servers and networking equipment.
As computing infrastructure expands, interconnect performance can influence overall system efficiency and the ability to support increasingly complex workloads.
Semtech’s optical and copper connectivity products are designed to address these requirements through high-speed signal processing and transmission.
The expanded manufacturing agreement is intended to provide the production capacity needed to support successive generations of these technologies.
Semtech President and Chief Executive Officer Hong Hou emphasised the growing importance of connectivity infrastructure in supporting artificial intelligence systems.
“Connectivity has become a key factor determining how far AI systems can scale,” Hou said.
“Meeting this demand requires long-term capacity planning and firm commitments with our manufacturing partners.”
His comments reflected the increasing importance of semiconductor components that enable communication between data centre systems.
As AI infrastructure grows, manufacturers are seeking to ensure that the availability of networking components keeps pace with demand for computing equipment.
The expanded partnership with Tower is intended to provide Semtech with greater visibility over its future manufacturing capacity.
The announcement follows recent recognition of Semtech’s work in high-speed optical connectivity.
At the European Conference on Optical Communication (ECOC) 2026, Semtech received an Optical Component Innovation award for its family of 224 Gbps-per-lane transimpedance amplifiers.
The products are designed for linear pluggable optics and are manufactured using Tower Semiconductor’s SiGe process technology.
Transimpedance amplifiers are important components in optical receivers, converting electrical current signals generated by photodetectors into voltage signals that can be processed by other electronic systems.
The award highlighted a product family developed through the companies’ established manufacturing relationship.
It also demonstrated the application of Tower’s SiGe technology to high-speed optical communications equipment.
The companies intend to build on this collaboration as they develop future interconnect products for data centre applications.
In addition to expanding manufacturing capacity, Tower Semiconductor and Semtech are collaborating on a joint technology roadmap covering multiple generations of data centre interconnect products.
The initiative is intended to align future semiconductor manufacturing capabilities with Semtech’s product development requirements.
Tower Semiconductor Chief Executive Officer Russell Ellwanger said the partnership was focused on advancing technology across current and future product generations.
“Together, we are developing platform-level solutions that add value and help advance their designs, delivering leading performance characteristics across current, next-generation and N+2 technologies,” Ellwanger said.
The collaboration is expected to address the increasing technical requirements associated with higher-speed connectivity and more demanding data centre workloads.
By coordinating manufacturing and product development, the companies aim to support future improvements in signal performance and interconnect capacity.
The latest agreement extends a manufacturing relationship that has lasted approximately two decades.
For Semtech, securing dedicated capacity across Tower’s international facilities provides a foundation for supporting its optical and copper interconnect portfolio as demand evolves.
For Tower Semiconductor, the arrangement reinforces its role as a manufacturing partner for advanced analogue semiconductor technologies used in high-speed communications.
The companies have not disclosed the financial value of the agreement, the volume of additional manufacturing capacity or specific production milestones.
However, the expanded arrangement establishes a longer-term framework for manufacturing and technology development as data centre operators continue investing in higher-bandwidth connectivity infrastructure.
The partnership will focus on supporting existing interconnect technologies while preparing for future generations operating at 3.2T and beyond.
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