Tower Semiconductor and Semtech have expanded their partnership to serve rising AI data center demand, the two companies announced. The agreement extends an existing foundry relationship. It targets silicon used in high-speed connectivity inside AI data centers.

Semtech supplies analog and mixed-signal chips. Its product families serve infrastructure, high-end consumer and industrial markets. Tower operates specialty fabs in Israel, the United States and Japan. The foundry focuses on analog power management, radio frequency and SiGe processes rather than leading-edge digital nodes.

Neither company disclosed financial terms of the expanded agreement. Tower did not publish capacity figures tied to the deal. Semtech gave no revenue guidance linked to the arrangement.

What does the expanded deal cover?

The partnership deepens wafer supply arrangements between the two firms. Tower confirmed it will manufacture for Semtech products aimed at AI data center infrastructure. AI clusters depend heavily on analog connectivity silicon: serializers and deserializers, power management devices and signal integrity circuits.

These chips sit alongside GPUs and accelerators. They carry data between processors, memory and networking equipment. Demand for them has grown as hyperscalers build larger AI training and inference clusters.

Specialty foundries such as Tower produce this class of silicon on mature process geometries. Capacity in these nodes, not leading-edge lithography, often gates AI infrastructure output. Geometries in the 130nm to 300nm range remain heavily booked across the specialty market.

Why does AI demand reach mature-node foundries?

AI data centers need far more than compute processors. Every rack requires power delivery, optical and copper interconnect and clocking devices. These functions run on analog processes that leading-edge fabs do not prioritize.

Tower's process portfolio addresses this gap. The company lists power management, SiGe, RF SOI and mixed-signal CMOS among its platforms. SiGe BiCMOS in particular supports high-speed transimpedance amplifiers and drivers used in optical modules for AI interconnects.

Semtech sells into this same chain. Its infrastructure product line includes signal integrity and analog mixed-signal parts for data center networking. A closer Tower supply relationship gives Semtech committed wafer capacity as AI interconnect demand rises.

What are the commercial terms?

The companies kept the agreement's specifics confidential. Tower did not state which fabs will run the additional wafers. Semtech did not disclose volumes, durations or pricing terms.

Both firms framed the expansion as a response to customer demand rather than a speculative capacity bet. Tower has positioned itself in recent years as a merchant supplier of analog capacity at a time when IDMs have pulled back from mature nodes.

For Semtech, secured foundry capacity reduces supply risk in a segment where AI infrastructure orders can scale quickly. For Tower, the deal adds committed demand from a longtime customer rather than new business in an unrelated market.

What comes next?

The expanded agreement takes effect under the existing commercial framework between the two companies. No timeline for volume ramps was published. Execution will depend on how quickly hyperscaler interconnect and power budgets translate into orders for mature-node analog silicon, and on whether Tower's specialty capacity keeps pace with AI data center buildout across 2025 and beyond.