Tower Semiconductor's stock surged 9.57% during intraday trading on Tuesday, marking a significant upward movement for the semiconductor manufacturer.

The sharp rise was primarily driven by a formal statement from its core customer, InnoLight, which categorically denied market rumors regarding yield issues with Tower's 1.6T silicon photonics chips at its Fab 9 factory, labeling them as maliciously fabricated false information. Tower Semiconductor also clarified that process adjustments are standard industry practice and do not impact long-term customer relationships or capacity expansion plans, adding that yields for its 800G silicon photonics chips are already at high levels.

Furthermore, the stock benefited from a broad rally across the semiconductor sector, which created positive market momentum and helped the stock recover from previous declines, easing selling pressure from profit-taking activity.