Tower Semiconductor stock surged 16% Thursday morning after the company announced a collaboration with NVIDIA to develop advanced silicon photonics technology for AI data centers.

The Israel-based semiconductor foundry will scale AI infrastructure deployments with high-performance silicon photonics for 1.6T data center optical modules designed for NVIDIA networking protocols. According to the company, its silicon photonics technology enables up to double the data rate compared to prior solutions, providing increased bandwidth for optical connectivity and accelerating AI application performance.

"Tower Semiconductor is proud to deliver advanced, high-speed technologies that support demanding data center and AI requirements," said Russell Ellwanger, CEO of Tower Semiconductor. The company indicated it continues to invest across its SiGe and silicon photonics platforms to support next-generation data center architectures.

The collaboration addresses growing demands in AI infrastructure. "The exponential growth of AI is driving the need for a new class of high-speed, scalable networking to connect AI infrastructure," said Gilad Shainer, Senior Vice President of Networking at NVIDIA.

Tower’s silicon photonics platform is optimized for high-speed optical interconnects, positioning the company as a foundry partner for companies involved in AI infrastructure, data center networking, and advanced telecommunications.