Tower Semiconductor Expands SiPho and SiGe Capacity to Meet AI Data Center Demand

Tower Semiconductor

Tower Semiconductor accelerates silicon photonics (SiPho) and silicon germanium (SiGe) capacity expansion following record first-quarter revenue from these advanced semiconductor technologies. The Israel-based foundry invests $350 million to repurpose fabrication facilities across Israel, Texas, and Japan to meet surging demand. Tower Semiconductor SiPho and SiGe production ramp directly supports AI data center infrastructure expansion and next-generation optical communications systems requiring specialized semiconductor materials.

Fabrication Facility Utilization Rises Across Global Manufacturing Network

Tower Semiconductor operates multiple fabrication facilities at varying utilization rates to optimize SiPho and SiGe production capacity across its global network. Fab 2 currently runs at 55% utilization while building SiGe capacity, with available space awaiting customer qualification processes. Meanwhile, Fab 3 operates at 80% capacity, Fab 5 reaches 65% utilization driven by high-voltage power management demand, and Fab 7 exceeds its 85% model at full capacity.

The company's Fab 9 facility operates at 70% utilization as SiPho and SiGe expansion continues across the production line. Tower relocated 300mm wafer production for mobile handsets to its shared facility in Agrate, Italy with STMicroelectronics. As a result, this strategic move frees additional capacity at Fab 7 in Japan for new SiGe and SiPho 300mm products targeting data center applications.

AI Infrastructure Drives Silicon Photonics Technology Adoption

Silicon photonics technology increasingly displaces conventional indium phosphide (InP) based electro-absorption modulated lasers in high-speed data communications applications. SiPho solutions now serve 800 gigabit per second speeds and are ramping to 1.6 terabits per second for AI data center requirements. However, some optical component manufacturers develop hybrid SiPho technologies integrating InP materials for enhanced performance capabilities.

Tower Semiconductor collaborates with Chinese data center optics manufacturer Innolight Technology and US-based OpenLight Photonics on advanced SiPho development projects. OpenLight processes InP materials directly on SiPho wafers using Tower's PH18DA platform, reducing costs and time for laser integration. Therefore, these partnerships accelerate Tower Semiconductor SiPho technology advancement while expanding customer applications across global markets.

Radio frequency infrastructure business growth stems from data center and AI expansions requiring SiPho and SiGe technologies for optical fiber communications. SiGe demand increases strongly through continued adoption for transimpedance amplifiers and drivers in optical modules. Consequently, Tower expects significant long-term SiGe adoption in satellite terrestrial receivers and low-noise amplifiers for advanced handset applications.

The Metalnomist Commentary

Tower Semiconductor's strategic capacity expansion for SiPho and SiGe technologies positions the company at the intersection of AI infrastructure growth and advanced semiconductor materials demand. The shift toward silicon-based photonics solutions reduces reliance on traditional III-V materials like indium phosphide while creating new opportunities for specialized semiconductor manufacturing capabilities that support next-generation data center and telecommunications infrastructure requirements.