Salience Labs and Tower Semiconductor Partner to Manufacture At-Scale Optical Circuit Switches for Next-Generation Data Centers
Rhea-AI Summary
Tower Semiconductor (NASDAQ:TSEM) and Salience Labs announced a partnership to manufacture Photonic Integrated Circuit (PIC) based Optical Circuit Switches (OCS) for AI datacenter infrastructure, moving the program from development into a pre-production phase.
The collaboration leverages Tower's silicon photonics platforms PH18DA (with integrated III-V lasers) and TPS45PH (low-loss nitride waveguides) to target lower latency, higher bandwidth and reduced energy per bit for AI clusters. The release cites Dell'Oro Group's projection that data-center switch spending for AI back-end networks could exceed $100 billion by 2030. Both companies will attend OFC 2026 (March 17–19) for meetings and demonstrations.
Positive
- Program advanced to pre-production, indicating progress toward manufacturability and product readiness
- Access to Tower PH18DA and TPS45PH silicon photonics platforms for integrated lasers and low-loss waveguides
- Addresses AI datacenter needs for lower latency, higher bandwidth and reduced energy per bit
Negative
- Not yet in volume manufacturing; partnership is in pre-production, so commercial revenue timing remains uncertain
- No financial terms or volume targets disclosed, limiting near-term visibility into revenue or dilution impact
Key Figures
Market Reality Check
Peers on Argus
TSEM slipped -1.11% while key peers were mostly positive: QRVO +0.13%, SITM +1.16%, SMTC +1.84%, MTSI +1.12%, and LSCC -0.30%. This points to a stock-specific move rather than a broad semiconductor rotation.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 19 | Quantum partnership | Positive | -2.8% | Expanded Xanadu collaboration on silicon photonics for photonic quantum computers. |
| Feb 17 | AI photonics milestone | Positive | -0.8% | Scintil partnership on integrated DWDM laser sources for AI infrastructure. |
| Feb 11 | Earnings – record revenue | Positive | -1.6% | Reported record Q4 and full-year 2025 revenue and major SiPho CapEx. |
| Feb 05 | NVIDIA AI collaboration | Positive | +6.4% | Collaboration with NVIDIA on 1.6T data center optical modules for AI. |
| Jan 29 | Conference participation | Positive | -3.0% | Announcement of participation in Susquehanna 15th Annual Technology Conference. |
Recent positive AI and photonics news for TSEM has often seen muted or negative next-day moves, except for the NVIDIA 1.6T optical modules collaboration, which drew a stronger positive reaction.
Over the past month, Tower Semiconductor has reported record Q4 2025 revenue of $440 million and full-year 2025 revenue of $1.57 billion, alongside expanded silicon photonics collaborations in AI and quantum. Partnerships with NVIDIA on 1.6T optical modules and with Scintil Photonics on DWDM lasers reinforced its AI data center positioning. Another collaboration with Xanadu advanced photonic quantum hardware. Despite this, several of these ostensibly positive updates (on Feb 11, Feb 17, and Feb 19) were followed by modest share price declines, suggesting investors have been selective in rewarding such news.
Market Pulse Summary
This announcement adds optical circuit switches for AI data centers to Tower’s silicon photonics efforts, complementing earlier collaborations in DWDM lasers and high-speed optical modules. Positioned against a projected $100 billion AI switch market by 2030, the deal highlights Tower’s role in next‑generation connectivity. Investors may watch how quickly this pre‑production phase moves to volume manufacturing, how it integrates with existing AI partnerships, and whether it drives incremental revenue over coming product cycles.
Key Terms
photonic integrated circuit (pic) technical
silicon photonics technical
AI-generated analysis. Not financial advice.
Salience Lab’s Innovative Architecture leverages Tower’s differentiated Silicon Photonics platforms to deliver ultra-low latency, high-bandwidth and lower-power optical connectivity for AI clusters
MIGDAL HAEMEK, Israel, and OXFORD, England, February 25, 2026 — Tower Semiconductor, the leading foundry of high-value analog semiconductor solutions, and Salience Labs Limited, a leader in photonic solutions targeting connectivity for AI datacenter infrastructure, today announced a partnership to manufacture Photonic Integrated Circuit (PIC) based Optical Circuit Switches (OCS) for AI infrastructure. The collaboration leverages Tower’s high-volume silicon photonics platforms, namely, PH18DA with integrated III-V lasers and TPS45PH, with low loss nitride waveguides. The partnership moves from development into pre-production phase, driving product readiness and at-scale deployment for AI data-center deployment.
AI workloads are driving unprecedented growth in data-center scale and network complexity, increasing the need for higher bandwidth, lower network latency and lower energy per bit across optical interconnects. OCS architecture provides an ideal alternative to the current OEO conversion-based Electronic Packet Switching (EPS) architecture by moving more connectivity and switching into the optical domain and minimizing electrical bottlenecks. According to Dell’Oro Group, data center switch spending in AI back-end networks will exceed
“Tower is a key partner for Salience Labs, supporting our roadmap with its silicon photonics and switching technology platforms,” said Vaysh Kewada, Founder, CEO and Director, Salience Labs. “Our collaboration builds on our deep expertise in silicon photonics and specialty platforms, strengthening our ability to deliver optical switch technology optimized for the performance and power demands of AI data centers.”
“Silicon photonics with integrated light sources is a key enabler for scaling next-generation optical connectivity, and our collaboration with Salience Labs reinforces our strong momentum in AI and data-center infrastructure,” said Dr. Ed Preisler, Vice President and General Manager of RF Business Unit, Tower Semiconductor. “Salience Labs brings a compelling OCS approach for AI infrastructure, and we’re excited to support its scaling. Leveraging the ability to combine our silicon photonics and specialty process platforms, enables customers to industrialize silicon photonics-based switching architectures, while securing a path from development phase to volume manufacturing.”
Both companies will be attending the upcoming OFC 2026 Conference in Los Angeles, March 17–19, with representatives available for meetings during the event. For more information about Salience Labs, visit booth #5232 and its website: here.
To learn more about Tower Semiconductor’s advanced silicon photonics (SiPho) platform and RF & HPA technology offerings, visit booth #2221. Additional information is also available on the Company’s website: here.
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 SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), photonics, 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 owns one operating facility in Israel (200mm), two in the U.S. (200mm), two in Japan (200mm and 300mm) which it owns through its
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.
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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 Salience Labs
Salience Labs Limited is a leader in photonic solutions targeting connectivity for AI datacenter infrastructure. Founded in 2021 and backed by over a decade of research from the University of Oxford in the UK and University of Münster in Germany, Salience’s innovative developments in photonic switching technology enable high-speed, ultra-low latency networking fabrics that remove infrastructure bottlenecks for AI workloads. Learn more at www.saliencelabs.ai
Salience Labs Media Contact
Kathryn Ghita | Wireside Communications for Salience Lab | saliencelabs@wireside.com
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FAQ
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