Tower Semiconductor surges after Nvidia deal promises to double AI data center speeds
Israeli chipmaker scales silicon photonics for 1.6T optical modules supporting Nvidia networking.
Tower Semiconductor, the Israeli chipmaker, is stepping into the spotlight of the AI infrastructure boom through a major collaboration with Nvidia. The company announced it is scaling high-performance silicon photonics for 1.6T data center optical modules designed to meet Nvidia networking protocols, promising up to double the data-rate of prior solutions and dramatically improving bandwidth for AI workloads.
Shares of Tower surged sharply on the news, with the company's stock now up around 140% over the last six months.
“The exponential growth of AI is driving the need for a new class of high-speed, scalable networking to connect AI infrastructure,” said Gilad Shainer, Senior Vice President of Networking at Nvidia. “Nvidia is collaborating with Tower Semiconductor to advance the ecosystem, enabling more efficient AI infrastructure through next-generation silicon photonics and accelerating AI applications at scale.”
Tower’s silicon photonics replaces conventional copper connections with light-based data transmission, allowing for far higher throughput and lower energy consumption. As AI workloads expand rapidly, copper connections increasingly act as a bottleneck. Photonics offers a pathway to handle massive data flows between servers, GPUs, and AI systems at speeds and efficiency previously unattainable.
Russell Ellwanger, Tower’s CEO, emphasized the strategic importance of the partnership. “Tower Semiconductor is proud to deliver advanced, high-speed technologies that support demanding data center and AI requirements,” he said. “We continue to invest significantly across our SiGe and silicon photonics platforms to support the ecosystem with industry-leading performance, scalability, and manufacturability, enabling customers to advance next-generation data center architectures.”
The Nvidia deal is a culmination of Tower’s years-long pivot toward photonics. The company has invested more than $650 million in expanding silicon photonics capacity over the last year alone, including a $300 million expansion of its production lines at its Migdal HaEmek facility in northern Israel, which is set to become Tower’s largest photonics hub. Once completed in the first half of 2026, Tower expects revenue from photonics-related products to approach $1 billion annually, with data-center applications accounting for 40% to 45% of total revenue.
