IQE and Tower Semiconductor sign multi-year InP epiwafer deal
IQE plc and Tower Semiconductor have signed a multi-year supply agreement under which the Cardiff-based compound semiconductor specialist will provide Indium Phosphide epiwafers for Tower's silicon photonics platforms. The deal targets optical connectivity infrastructure serving AI-driven data centres and resolves a separate, long-running patent dispute between the two companies.
Under the terms disclosed, Tower has committed to minimum purchase volumes in the first year, with reciprocal supply commitments from IQE and volume floors for subsequent years. The release did not state the financial value of the contract. In a linked but legally distinct agreement, Tower will grant IQE a worldwide, royalty-free licence to porous silicon patents that had been the subject of litigation, settling all claims between the parties.
Technical scope
The collaboration spans several of Tower's advanced silicon photonics process platforms. Current work includes technology for 200Gbs per-lane pluggable transceivers; the companies are also prototyping next-generation 400Gb per-lane modulators. Optical circuit switches for data-centre deployment are cited as a further application. IQE's InP epiwafers provide the III-V material layer that enables the high-speed electro-optic modulation silicon alone cannot readily deliver.
Jutta Meier, chief executive of IQE, described the agreement as reinforcing the company's position within "Tier 1 global hyperscale cloud and AI infrastructure markets." Dr Marco Racanelli, president of Tower Semiconductor, said the combination of InP high-performance components with Tower's established high-volume silicon photonics platform would enable products capable of meeting the performance and scale demands of future AI infrastructure.
Market context
Silicon photonics has moved from niche research into mainstream data-centre procurement as hyperscalers race to relieve electrical interconnect bottlenecks inside AI training clusters. The shift to 800G and then 1.6T optics inside the rack is driving material demand for InP-based components, which outperform pure silicon at the transceiver speeds required. IQE competes in epiwafer supply with a small number of vertically integrated players and specialist epitaxy houses, operating in a market with high barriers to entry given the process complexity and capital intensity of compound semiconductor manufacturing.
Tower's silicon photonics platform, known internally as SiPho, already serves a range of infrastructure customers. Adding an assured, volume-committed InP epiwafer source strengthens Tower's ability to offer a more complete photonic integration stack to foundry customers developing coherent and pluggable optics at 400G and beyond. The settlement of the porous silicon IP dispute removes a residual legal overhang that could otherwise have complicated joint customer engagements.
Regulatory and standards read-across
Both IQE and Tower supply into data-centre infrastructure that sits in the crosshairs of US export-control frameworks administered by the Bureau of Industry and Security. Compound semiconductor materials and certain photonic components are subject to Export Administration Regulations review, particularly where dual-use applications in aerospace and defence overlap with commercial data-centre products. IQE's manufacturing footprint spans the UK, US and Taiwan; Tower operates fabs in Israel, the US, Japan and, through a shared facility, Italy. That geographic spread provides customers with multi-jurisdiction sourcing options but also means both companies must navigate a complex web of BIS, UK Export Control Joint Unit and EU export rules as AI-infrastructure supply chains attract closer government scrutiny.
For IQE, the deal provides a named Tier 1 customer reference at a moment when the company has been working to demonstrate revenue visibility to AIM investors. Progress toward 400Gb per-lane modulators entering volume production will be the key technical milestone to watch in the coming 18 months.