IQE Shares Surge as Tower Semiconductor Deal Signals AI Data Centre Breakthrough

Shares in IQE plc (LON: IQE) surged more than 16% on Monday morning, hitting an intraday high of 55.5p, after the Cardiff-based compound semiconductor specialist announced a landmark multi-year supply agreement with Tower Semiconductor (NASDAQ: TSEM) for Indium Phosphide (InP) epiwafers.

The stock was last trading at 53.7p, up from Friday’s close of 46.25p, on heavy volume.

The agreement will see IQE supply InP epiwafers to Tower for use across several of its advanced silicon photonics platforms, targeting next-generation optical connectivity solutions underpinning AI-driven data centre infrastructure.

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Specifically, the collaboration covers technology for 200Gb/s per lane pluggable transceivers and the prototyping of cutting-edge 400Gb/s per lane modulators, as well as optical-circuit-switches for data centre deployment — components that are rapidly becoming critical as hyperscalers race to expand AI capacity.

The deal includes minimum purchase commitments from Tower in the first year and reciprocal supply obligations from IQE, providing meaningful revenue visibility for the AIM-listed group.

In a separate but equally significant development, the two companies have resolved all prior intellectual property disputes, with Tower granting IQE a broad, worldwide, royalty-free licence covering porous silicon patents that had been the subject of litigation.

IQE CEO Jutta Meier called the agreement a reinforcement of the company’s “position within Tier 1 global hyperscale cloud and AI infrastructure markets,” while Tower’s President, Dr. Marco Racanelli, highlighted IQE’s role as “a key supplier for our next-generation photonic technologies.”

The announcement adds to growing momentum at IQE following April’s £45 million financing deal and long-term supply agreement with MACOM Technology Solutions, suggesting the company is actively rebuilding its commercial pipeline across the AI and semiconductor supply chain.