Tower jumps on Nvidia partnership for ultra-fast AI networking

Tower Semiconductor’s shares rose sharply after the Israeli chipmaker revealed a new collaboration with Nvidia focused on next-generation data-center networking.

The company said it is scaling silicon-photonics technology for 1.6-terabit optical modules that comply with Nvidia’s networking standards. 

The new modules are designed to deliver roughly twice the data throughput of current solutions, a major upgrade for AI-driven data centers where bandwidth has become a critical constraint.

Tower’s stock is now up about 140% over the past six months.

Unlike traditional copper connections, silicon photonics uses light to move data between servers and processors. This approach significantly increases transmission speed while reducing power consumption—an advantage as AI systems push existing infrastructure to its limits.

Tower’s chief executive, Russell Ellwanger, said the partnership strengthens the company’s role in advanced data-center architectures and reflects its growing focus on high-performance manufacturing for AI and cloud customers.

The agreement also marks the latest milestone in Tower’s multi-year shift toward photonics. Over the past year, the company has invested more than $650 million to expand its silicon-photonics capacity, including a major upgrade at its Migdal HaEmek facility in northern Israel. That site is expected to become Tower’s largest photonics hub.

Once the expansion is completed in the first half of 2026, Tower expects annual revenue from photonics products to approach $1 billion, with data-center customers contributing roughly 40% to 45% of that total.