IQE and Tower Semiconductor Announce Multi-year InP epiwafer Supply Agreement

Rhea-AI Summary

Tower Semiconductor (NASDAQ/TASE:TSEM) and IQE announced a multi-year InP epiwafer supply agreement supporting AI-driven data center optical connectivity. IQE will supply InP epiwafers for Tower’s advanced silicon photonics platforms, including 200Gbs/lane transceivers and prototyping of 400Gb/lane modulators.

The deal includes first-year minimum purchase and reciprocal supply commitments, continuing minimum volume commitments, and a separate worldwide, royalty-free porous silicon patent license from Tower to IQE that settles all prior IP disputes and litigation between the companies.

AI-generated analysis. How Rhea-AI works. Not financial advice.

Positive

• Multi-year InP epiwafer supply agreement underpinning Tower’s silicon photonics roadmap
• First-year minimum purchase commitment and ongoing minimum volume commitments from Tower
• Worldwide, royalty-free porous silicon patent license from Tower to IQE
• Settlement of all prior IP disputes and related litigation between IQE and Tower
• Support for 200Gbs/lane transceivers and prototyping of 400Gb/lane modulators for AI data centers

Negative

• None.

News Market Reaction – TSEM

+9.11%

33 alerts

+9.11% News Effect

+5.1% Peak in 5 hr 20 min

+$2.74B Valuation Impact

$32.83B Market Cap

0.2x Rel. Volume

On the day this news was published, TSEM gained 9.11%, reflecting a notable positive market reaction. Argus tracked a peak move of +5.1% during that session. Our momentum scanner triggered 33 alerts that day, indicating elevated trading interest and price volatility. This price movement added approximately $2.74B to the company's valuation, bringing the market cap to $32.83B at that time.

Data tracked by StockTitan Argus on the day of publication.

Market Context

The stock moved +9.1% in the session following this news. A strong positive reaction aligns with TSE...

Analysis

The stock moved +9.1% in the session following this news. A strong positive reaction aligns with TSEM’s recent pattern, where major silicon photonics wins and capacity agreements around AI infrastructure previously saw moves above 20%. This InP epiwafer deal extends that narrative by adding a multi-year supply framework and resolving IP disputes. Investors might still weigh concentration in AI-related demand and execution on long-term volume commitments when assessing how durable such strength could be.

Key Figures

InP lane speed: 200Gbs/lane Next-gen modulator speed: 400Gb/lane Israel fab size: 200mm +4 more

7 metrics

InP lane speed 200Gbs/lane Production technology for pluggable transceivers

Next-gen modulator speed 400Gb/lane Prototyping next-generation modulators

Israel fab size 200mm One operating facility in Israel

U.S. fab count 2 fabs (200mm) Two 200mm facilities in the U.S.

Japan fab sizes 200mm and 300mm Two facilities in Japan via TPSCo

TPSCo ownership 51% Ownership stake in TPSCo joint venture

Italy 300mm facility 300mm Shared facility in Agrate, Italy with STMicroelectronics

Historical Context

5 past events · Latest: May 13 (Positive)

Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
May 13	SiPho contracts win	Positive	+22.6%	Announced $1.3B 2027 SiPho contracts and larger 2028 wafer commitments.
May 13	Q1 2026 earnings beat	Positive	+22.6%	Reported 15% YoY revenue growth and record Q2 2026 revenue guidance.
May 04	Investor conferences	Neutral	-1.4%	Outlined participation in several May–June 2026 investor conferences.
Apr 27	Defense SiGe ICs	Positive	+1.4%	Launched high-power SiGe radar ICs for secure U.S. defense applications.
Apr 20	Earnings call notice	Neutral	-0.9%	Announced schedule and access details for upcoming Q1 2026 earnings call.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Recent news tied to silicon photonics growth and strong earnings has coincided with sharply positive price reactions, while routine announcements draw muted moves.

Recent Company History

Over the last few months, TSEM highlighted major silicon photonics momentum, including $1.3 billion of 2027 SiPho contracts and a 2028 model targeting $2.8 billion revenue and $750 million net profit. Q1 2026 results showed 15% year-over-year revenue growth to $414 million with strong guidance to $455 million. Defense SiGe IC collaboration news and conference participation produced smaller moves. Today’s InP epiwafer agreement fits the ongoing photonics and AI infrastructure expansion narrative.

Key Terms

epiwafer, indium phosphide, silicon photonics, pluggable transceivers, +4 more

8 terms

epiwafer technical

"announce a multi-year agreement for the supply of Indium Phosphide (InP) epiwafers for optical"

An epiwafer is a semiconductor wafer (a thin, round slice of silicon or another material) that has an ultra-thin, precisely grown crystal layer on its surface to create specific electrical properties. Investors care because epiwafers are a higher-spec, higher-cost input for advanced chips; their availability, quality and price influence chipmakers’ production costs, profit margins and the wider supply chain—think of them as premium-grade material versus ordinary raw boards in construction.

indium phosphide technical

"announce a multi-year agreement for the supply of Indium Phosphide (InP) epiwafers for optical"

Indium phosphide is a high-performance semiconductor material used to make chips, lasers and detectors that carry and process light and very fast electrical signals. Think of it as a specialized road surface designed for high-speed light traffic—better suited than ordinary silicon for fiber-optic communications, high-frequency electronics and some sensors. Investors care because demand and supply for this material affect companies in telecom, data centers, photonics and semiconductor supply chains, influencing costs, production capacity and technology competitiveness.

silicon photonics technical

"used in several of Tower’s advanced silicon photonics platforms for next-generation optical"

Silicon photonics is the technology that uses tiny structures etched into silicon chips to generate, control and detect light for moving data and sensing, essentially putting optical fiber functions onto a computer chip. For investors, it matters because it can dramatically increase data speed and energy efficiency in data centers, telecom networks and advanced sensors, potentially lowering costs and enabling new products much like replacing many metal wires with faster, low-power optical highways.

pluggable transceivers technical

"technology for the production of 200Gbs/lane for pluggable transceivers and the prototyping"

Small removable modules that plug into networking equipment to send and receive data over fiber or copper cables, enabling different speeds and distances without replacing the main device. They matter to investors because they affect hardware compatibility, upgrade costs, supply-chain risk and recurring sales — like being able to change a light bulb to get brighter light instead of replacing the whole lamp, which influences product lifecycles and vendor margins.

modulators technical

"the prototyping of next-generation 400Gb/lane modulators, as well as other critical"

Modulators are drugs or compounds that adjust how a specific biological target—like a protein, receptor, or gene pathway—works, nudging its activity up, down, or back toward normal instead of simply turning it on or off. For investors, modulators matter because they can offer more precise treatment effects and potentially fewer side effects than blunt alternatives; clinical trial outcomes, safety data and regulatory decisions for modulators can significantly change a biotech or pharmaceutical company’s value, much like finely tuning an engine can improve a car’s performance.

optical-circuit-switches technical

"other critical applications including optical-circuit-switches for deployment in datacentres."

Optical circuit switches are hardware devices that route light signals through fiber-optic cables, directing whole channels of data like railroad switches guiding trains onto different tracks. They matter to investors because they can dramatically increase network speed and capacity while cutting power and equipment costs, enabling growth in cloud services, content delivery and telecommunications—factors that influence revenue, capital spending and competitive advantage in network-dependent businesses.

bipolar cmos (bicmos) technical

"process platforms such as SiPho, SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor"

Bipolar CMOS (BiCMOS) is a semiconductor manufacturing technology that combines two types of transistors—bipolar junction transistors for fast, high-current tasks and CMOS transistors for low power and dense logic—on a single chip. For investors, BiCMOS matters because it enables products that balance speed and energy efficiency, often opening higher-performance market segments or allowing cost and battery-life advantages; think of it like a hybrid car that blends power and fuel economy to win more buyers.

mems technical

"integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides"

MEMS are tiny machines built on silicon that combine electrical circuits with moving parts—think microscopic sensors, switches and actuators like the small gears in a watch but made with semiconductor manufacturing. They matter to investors because MEMS are key components in smartphones, cars, medical devices and industrial equipment; changes in demand, production cost or technological improvements can directly affect suppliers’ revenues, margins and competitive position.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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• Supporting planned growth in InP silicon photonics technology
• Resolving all prior IP disputes between the companies

CARDIFF, UK, and MIGDAL HAEMEK, Israel, June 15 2026 - IQE plc (AIM: IQE, "IQE" or the "Group"), the leading global supplier of compound semiconductor wafer products and advanced material solutions, and Tower Semiconductor (NASDAQ/TASE: TSEM), the leading foundry for high-value analog semiconductor solutions, are pleased to announce a multi-year agreement for the supply of Indium Phosphide (InP) epiwafers for optical connectivity solutions serving AI-driven data centre infrastructure.

IQE’s InP epiwafers will be used in several of Tower’s advanced silicon photonics platforms for next-generation optical technologies, providing a high-quality supply base for Tower’s product roadmap. IQE and Tower’s collaboration includes technology for the production of 200Gbs/lane for pluggable transceivers and the prototyping of next-generation 400Gb/lane modulators, as well as other critical applications including optical-circuit-switches for deployment in datacentres. The agreement provides for a minimum purchase commitment by Tower in the first year, a reciprocal supply commitment from IQE, and minimum volume commitments thereafter.

Under a separate agreement, Tower will also provide a broad worldwide and royalty-free license to IQE for porous silicon patents which have been the subject of an IP dispute between the companies, settling all litigation in the matter.

Jutta Meier, Chief Executive Officer of IQE, commented:

“I am pleased to move forward together with Tower, already the leader in silicon photonics. This agreement reinforces IQE’s position within Tier 1 global hyperscale cloud and AI infrastructure markets. With decades of InP epitaxy expertise and established high-volume manufacturing capability, IQE is primed to support next-generation optical connectivity applications as they scale from innovation to commercial deployment.”

Dr. Marco Racanelli, President of Tower Semiconductor, commented:

“We are pleased to partner with IQE as a key supplier for our next-generation photonic technologies that add InP high-performance components to our high-volume, mature, silicon photonics platform. The combination will enable products that can deliver both the performance and high volumes required to scale future AI infrastructure capacity.”

ABOUT TOWER SEMICONDUCTOR
Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology, development, and process platforms for its customers in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiPho, SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor currently owns one operating facility in Israel (200mm), two in the U.S. (200mm), and two in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo and shares a 300mm facility in Agrate, Italy with STMicroelectronics. For more information, please visit: www.towersemi.com.

Safe Harbor Regarding Forward-Looking Statements
This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements. A complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect Tower’s business is included under the heading “Risk Factors” in Tower’s most recent filings on Forms 20-F, F-3, F-4 and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Tower does not intend to update, and expressly disclaim any obligation to update, the information contained in this release.  

Tower Semiconductor Company Contact:  
Orit Shahar | +972-74-7377440 | oritsha@towersemi.com
Tower Semiconductor Investor Relations Contact:
Liat Avraham | +972-4-6506154 | liatavra@towersemi.com

ABOUT IQE
http://iqep.com
IQE is the leading global supplier of advanced compound semiconductor wafers and materials solutions that enable a diverse range of applications across:

• Smart Connected Devices
• Communications Infrastructure
• Automotive and Industrial
• Aerospace and Security

As a scaled global epitaxy wafer manufacturer, IQE is uniquely positioned in this market which has high barriers to entry. IQE supplies the global market and is enabling customers to innovate at chip and OEM level. By leveraging the Group’s intellectual property portfolio including know-how and patents, it produces epitaxy wafers of superior quality, yield and unit economics.

IQE is headquartered in Cardiff UK, with employees across manufacturing locations in the UK, US and Taiwan, and is listed on the AIM Stock Exchange in London.

IQE Contacts:

IQE plc +44 (0) 29 2083 9400 Jutta Meier Mark Cubitt Amy Barlow	Deutsche Numis (Joint Broker) +44 (0) 20 7260 1000 Hugo Rubinstein Iqra Amin
Peel Hunt (Nomad and Joint Broker) +44 (0) 20 7418 8900 Ben Cryer Kate Bannatyne Adam Telling	Headland Consultancy (Financial PR) + 44 (0) 20 38054822 Andy Rivett-Carnac: +44 (0) 7968 997 365 Chloe Francklin: +44 (0)78 3497 4624

Attachment

• IQE Tower 2026 RNS_FINAL

FAQ

What did Tower Semiconductor (NASDAQ:TSEM) and IQE announce on June 15, 2026?

Tower Semiconductor and IQE announced a multi-year InP epiwafer supply agreement for silicon photonics platforms. According to IQE, the deal supports advanced optical connectivity for AI-driven data center infrastructure, with defined purchase and volume commitments to secure long-term material supply.

How does the IQE and Tower Semiconductor InP agreement impact AI data center infrastructure for TSEM?

The agreement aims to secure InP epiwafer supply for high-speed optical links in AI data centers. According to Tower Semiconductor, integrating IQE’s InP components into its silicon photonics platform targets the performance and volumes needed to scale future AI infrastructure capacity.

What are the key technical features of the IQE–Tower Semiconductor InP silicon photonics collaboration for TSEM?

The collaboration covers InP technology for 200Gbs per lane pluggable transceivers and 400Gb per lane modulators. According to IQE, these InP epiwafers will also support optical circuit switches and other critical datacenter applications within Tower’s advanced silicon photonics platforms.

What IP dispute did IQE and Tower Semiconductor (TSEM) resolve in June 2026?

IQE and Tower resolved prior IP disputes related to porous silicon patents through a separate agreement. According to Tower Semiconductor, the deal grants IQE a broad worldwide, royalty-free license for these patents and settles all existing litigation between the two companies.

What are the terms of Tower Semiconductor’s porous silicon patent license to IQE and how might it affect TSEM?

Tower Semiconductor will provide IQE a broad worldwide, royalty-free license for its porous silicon patents. According to Tower Semiconductor, this license accompanies settlement of all related IP litigation, potentially enabling smoother collaboration and deployment of porous silicon-related technologies in future products.

How could the IQE supply agreement strengthen Tower Semiconductor’s silicon photonics position and TSEM’s market exposure?

The agreement is intended to enhance Tower’s silicon photonics platforms with InP high-performance components. According to Tower Semiconductor, combining its mature silicon photonics processes with IQE’s InP expertise supports products addressing both required performance and volume in growing AI and cloud infrastructure markets.