Semtech guarantees dedicated SiGe capacity at the tower for the AI ​​– Unite.AI interconnection

Tower Semiconductor and Semtech Corporation announced on October 13, 2026, an expanded multi-year agreement under which Semtech will invest to secure dedicated silicon-germanium (SiGe) capacity at Tower, building on the companies’ 20-year partnership to support optical and copper interconnects for AI data center infrastructure.

The joint announcement, dated Migdal Haemek, Israel, and Camarillo, California, ties the capacity investment to what the companies described as strong design successes and demand for optical interconnect components for AI data centers. Tower operates as a foundry for high-value analog semiconductor solutions, while Semtech provides high-performance semiconductors for AI data center networks and Internet of Things connected devices.

Dedicated capacity in three regions

The secured capacity spans Tower’s factories in the United States, Israel and Japan, and the companies said the footprint gives Semtech’s manufacturing strategy greater supply resilience and geographic diversification. The agreement builds on current production and gives Semtech additional supply guarantees, with demand for its SiGe-based products expected to grow across an increasingly broad base of customer programs and end markets, according to the announcement.

Forward-looking statements in the release caution that results may differ from projections, citing Tower’s ability to install equipment and expand SiGe production capacity at its facilities on schedule, the possibility that demand for Semtech’s SiGe-based products may not develop as expected or that Semtech may not fully utilize its reserved capacity, and the risk that winning projects will not translate into production orders or revenue at the levels or on time expected. The statements also cite the pace of investment in AI data centers, the rate of adoption of next-generation interconnection speeds, and Semtech’s reliance on Tower for the production of its SiGe-based products, with such production concentrated in a limited number of facilities, including in Israel.

The SiGe portfolio and speed roadmap

The announcement describes power as AI’s next constraint, with a growing portion of that power going to data movement rather than processing. As AI clusters expand across racks, rows and campuses, the per-bit energy cost of moving data increasingly determines how much useful work each accelerator can provide, the companies said. Each step in the speed roadmap, from 800G to 1.6T and then to 3.2T, increases bandwidth, range and power-per-bit requirements, increasing the importance of the high-speed analog front end that drives and receives the signal.

Semtech’s signal integrity portfolio, which includes transimpedance amplifiers (TIAs), laser modulators and drivers, and linear equalizers, is based on Tower’s SiGe process technology. It serves fully synchronized optics (FRO), linear pluggable optics (LPO), linear receive optics (LRO), nearly packaged optics (NPO), eXtra-dense pluggable optics (XPO), PCB linear equalizers and active copper cables (ACC). Semtech believes these products enable it to manage copper links within the rack and optical links in the data center as the industry transitions to the next generation of architectures.

On August 25, 2026, Semtech introduced a family of 224G linear TIA and driver solutions designed for NPO and co-packaged optics (CPO) architectures in AI and machine learning clusters and hyperscale data centers: the GN1838L and GN42T380, which Semtech described as the industry’s first linear octal TIAs, and the GN42M380 linear octal Modulator Driver Mach-Zehnder, optimized for 1.6T, 3.2T, 6.4T and 12.8T optical engines. The GN1838L has a channel pitch of 500 µm and the GN42T380 a pitch of 375 µm; both include an automatic gain control stage and continuous-time programmable linear equalization. The GN42M380, with a channel pitch of 375 µm, supports silicon photonics, Mach-Zehnder indium phosphide, and thin-film lithium niobate modulators.

On September 21, 2026, Semtech announced its entry into the eXtra-dense Pluggable Optics Multi-Source Agreement (XPO MSA), an industry initiative that defines a 12.8T high-density optical transceiver form factor for AI infrastructure. According to the MSA, the current generation of modules provides 12.8T at 200G per lane with integrated liquid cooling, and a future generation is mapped to 400G per lane electrical interfaces.

Semtech said its 200G per lane modulation driver and TIA portfolio, which includes quad and octal TIAs with 750 µm, 500 µm and 375 µm channel pitches and Mach-Zehnder modulation drivers with 625 µm and 375 µm pitches, is designed to support XPO transceiver development and deployment of volumes. In the same release, Scott Wilkinson, lead analyst for optical components at Cignal AI, forecast demand for datacom optics to grow from $9 billion in 2024 to approximately $37 billion in 2026.

ECOC Award and Executive Statements

Semtech received the Optical Component Innovation (Chip/Wafer) Award at the European Optical Communications Conference (ECOC) 2026, held September 21-23, 2026 in Málaga, Spain, for its 224 Gbps per lane TIA family of pluggable linear optics, built on Tower’s SiGe technology. The companies said they continue to work closely on capability and on a joint technology roadmap described as designed to ensure product leadership in multigenerational AI data center interconnections.

Hong Hou, president and CEO of Semtech, said that Semtech customers are expanding interconnection bandwidth rapidly and at scale, and that meeting that demand requires long-term capacity planning and committed manufacturing partners. The deal, Hou said, “guarantees dedicated SiGe capacity in three regions to grow across copper and optical interconnects, from 800G and 1.6T today up to 3.2T and beyond.”

Russell Ellwanger, CEO of Tower Semiconductor, said companies are pushing platform-level solutions that deliver what he called best-in-class figures of merit in current-generation, next-generation and N+2 technologies, and that those solutions are being qualified well ahead of market needs. He said the partnership ensures continued expansion of what he described as the companies’ already leading market share in optical transceiver connectivity.