Tower Partners with IQE to Secure InP Supply

2026-06-17

On June 15, 2026, IQE, a global leader in compound semiconductor epitaxial wafers, and Tower Semiconductor, a well-known analog semiconductor foundry, jointly announced the signing of a multi-year Indium Phosphide (InP) epitaxial wafer supply agreement. The two parties will provide critical material support for optical connectivity solutions serving artificial intelligence-driven data center infrastructure.

Tower Partners with IQE to Secure InP Supply

IQE's InP epitaxial wafers will be applied to Tower's multiple advanced silicon photonics platforms, providing a high-quality supply foundation for its next-generation optical technology products. The collaboration covers mass production technology for 200Gbps/channel pluggable transceivers, as well as prototype development for next-generation 400Gbps/channel modulators, while also encompassing key applications such as optical circuit switching required for data center deployments. The agreement stipulates Tower's minimum purchase commitment for the first year, IQE's reciprocal supply commitment, and minimum volume guarantees for subsequent years.

Patent Dispute Settlement

Beyond the supply agreement, the two parties also reached another significant arrangement. Tower will grant IQE a global, royalty-free license for its porous silicon patents. Previously, IQE had sued Tower in July 2022, alleging misappropriation of IQE's trade secrets. This licensing marks the comprehensive settlement of all related intellectual property litigation between the two sides, eliminating long-standing legal obstacles.

Strategic Significance and Future Outlook

For Tower, securing IQE's InP supply provides critical material assurance for its silicon photonics product roadmap, helping to support its expansion plans in the AI data center optical interconnect sector. For IQE, the agreement solidifies its position in the global hyperscale cloud and AI infrastructure Tier 1 market, with its share price surging more than 17% on the day of the announcement.

Despite the positive prospects of the agreement, the minimum purchase and volume commitments also imply that Tower faces risks if demand falls short of expectations. Additionally, with alternative solutions from larger foundries such as TSMC being considered, the adoption speed of high-bandwidth optical solutions remains uncertain. Nevertheless, the resolution of the patent dispute eliminates legal friction, reducing execution risks for the two parties to deepen their cooperation in the future.

SEMICONE Chips Supply

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