Tower Semiconductor and Semtech expanded a multi-year agreement that reserves dedicated silicon germanium capacity for Semtech at Tower’s fabs.
The two companies have worked together for two decades. Under the new terms, Semtech invests to secure capacity for the components that carry data between and within AI data center systems.
The relevant products handle optical and copper interconnects. As clusters grow to thousands of accelerators, moving data between chips becomes the limiting factor, and the analog components doing that work are a small but scarce part of the build.
The reserved capacity spans Tower’s manufacturing sites in the United States, Israel and Japan. Both companies framed the geographic spread as supply resilience, a hedge against disruption at any single fab.
Silicon germanium is a specialty process rather than a mainstream one. Relatively few foundries run it at volume, which makes dedicated allocation meaningful when demand rises across multiple customers at once.
The agreement builds on existing production and adds capacity for growth. It reflects a pattern across the AI supply chain, where companies are buying certainty on scarce inputs years ahead rather than relying on spot availability.
