Semtech will invest to secure dedicated silicon germanium (SiGe) production capacity at Tower Semiconductor for its AI data-center interconnect chips. The expanded multiyear agreement, announced on Oct. 13, covers Tower’s fabs in the US, Israel and Japan. It supports Semtech’s optical and copper interconnect products as data centers move from 800G and 1.6T connections toward 3.2T. The companies did not disclose the investment amount, how much capacity is being reserved or how that capacity would be allocated across the three countries.

Semtech (SMTC US) Key Takeaway • Rating: Maintain Buy, Target Price $162 (22x FY28E EPS) • F2Q revenue $341.9mn (+33% YoY, +17% QoQ), beat consensus. Non‑GAAP EPS $0.71 (vs consensus $0.61) • Non‑GAAP gross margin record at 54.5% (+150bps QoQ), driven by data‑center • F3Q guidance tops market estimates: revenue $410mn; non‑GAAP gross margin 58.3%; EPS $1.02‑1.08 • AI‑related demand ~3x current supply capacity；growth bottleneck: SiGe / InP wafer & OSAT packaging constraints • 1.6T CopperEdge ACC entered mass shipment to major hyperscalers in F2Q (moved from sampling to material revenue) • 1.6T FiberEdge TIA‑driver initial shipments started; target >50% share in target 1.6T market by end‑FY27E • Post HieFo InP laser acquisition: advancing vertical integration of TIA, driver & laser chips for supply resilience • Deepened MSA standardization work for LPO / NPO; secured multiple design wins, expanding long‑term TAM • Pulled explicit segment YoY growth guidance due to supply uncertainty, but multi‑year hyperscaler AI demand outlook remains solid • Forecast FY27E / FY28E / FY29E EPS: $3.60 / $7.40 / $11 #SMTC# #Semtech# #1#.6T #Optical# #AIInfrastructure#

Abstract - Semtech (SMTC) Initiated Buy on 1.6T and NPO • Initiates with Buy, $180 PT (25x FY28E P/E). • Transitioning from an analog chip company to an AI interconnect beneficiary w portfolio spanning ACC, TIA, drivers, lasers and NPO analog solutions. • Guides FY27 AI revenue >$350M; we forecast $466M (FY27E) → $1.22B (FY28E), driven by 1.6T. • Google TPU expansion to be a key catalyst for CopperEdge ACC. • NPO adoption could be the next major growth leg beyond 2027 as DSP removal increases analog content. • Believes NVIDIA and leading CSPs are evaluating NPO deployments. • NPO market size : we forecast 38M NPO optical engines in 2028, suggesting a multi-billion-dollar TIA/driver TAM • Acquisition of HieFo strengthens its laser portfolio and expands optical content opportunities. #AI# #Semiconductors# #OpticalNetworking# #SMTC#

Ironically today was the most fun day of OCP and I spent zero time at the conference. Semtech analyst day followed by Avicina visit. Its going to take a few weeks to write because NDA stuff and frankly lot of material to cover. Lets just say I have strong opinions, weakly held.

Just some of my notes from $SMTC Q2 earnings: TLDR: Like $AAOI, it's all about Semtech expanding capacity - CEO said the capacity they've secured "may not be enough" for FY28... 1. Q2 upside is from 1.6T qualifying early - Pretty shocking (in a good way) how compressed the qualification timelines have become. - Hyperscalers and everyone upstream are pulling timelines forward so quickly rn. - We saw with $LITE, $COHR, $AAOI especially that demand is just bulldozing any qualification barriers. Now seeing the same with Semtech. 2. FiberEdge is quite underappreciated - I agree w/ mgmt that people are "overindexing on CopperEdge" - the better business is probably TIA/driver. - 800G TIA share has gone from ~18% two years ago to well over 50%, and they expect >50% share at 1.6T by January. - Impressive... - Industry 800G units: they entered the year on a ~50M forecast and are now hearing 80-90M vs. ~20M two years ago. - Impressive again... 3. Content per transceiver - goes from high single digits to $80-90 at 3.2T. - Quite funny - one analyst assumed that "high double digit" content meant teens. CEO corrected him with $80-90 lol. That's ~10x! - Photonics fab capacity goes 3-4x by year-end (they picked up a fully facilitated fab next to the existing one). - I don't think the market has modelled any of this. Even at half the claimed content, DC revenue stops scaling w/ transceiver units + starts scaling w/ units times content. - And every merchant InP line being tripled is another pointer that InP demand is way ahead of supply. - Which is the same signal $AAOI sent by clearing its HQ building for InP wafer expansion. 4. More capacity needed (obviously) - Secured capacity "may not be enough" especially 2H FY28. - Semtech are negotiating prepayments + joint capex with front/back-end partners, and qualifying additional OSATs to spread geopolitical risk. - Pricing: no erosion expected near term and none in the booked backlog. Cost increases are being passed through. Just what you wanna see :) 5. Gross margins are pretty insane - 54.5% in Q2 -> 58.3% guided -> 63.9% excl. the cellular module business being divested (closes Q4). - CFO framed ~64% as the post-close starting point. - I actually think 64% is the margin floor, not the target. Pretty sure they know they can do more lol. No reason to send out such a high target to the market otherwise. CEO also said that "we have the financial capability" to fund the FY28 capacity push": Looks like that's the case based on quick napkin maths: - FCF was $61M in Q2 - Q3 EBITDA guided to $134M - I'd say roughly $300M+ annualized FCF exiting the yr - Add $204M cash + $62M coming from Compal for the cellular module unit closing in Q4 So would be surprised to see any more dilution on top of what they already did a year ago. Overall though - pretty good earnings.

AI CONFERENCES AND INVESTOR DAYS, FRIDAY, OCTOBER 16, 2026 YESTERDAY: INVESTOR DAY TAKEAWAYS SEMTECH CORP INVESTOR DAY Thu Oct 15, San Jose Replay: • Q3 FY27 outlook raised at the day: net sales to $417.5M plus or minus $2.5M, from $410.0M plus or minus $5.0M, up 56% year over year at the midpoint, with adjusted EPS raised to $1.14 plus or minus $0.02, adjusted gross margin guided to 59.0% (64% excluding the cellular modules business being divested) and adjusted operating margin to 33.0% • New FY30 framework: $3.2B of net sales, including $2.1B from data center, with 70% adjusted gross margin, 48% to 50% adjusted operating margin, free cash flow at 35% of sales, and adjusted diluted EPS of $12.40 to $13.00; CEO Hong Hou said the FY30 growth is mostly driven by data center and LoRa • Balance sheet: net debt down to $299M at the end of Q2 FY27 from $1.3B at the end of FY24, with net leverage down to 1.1x from 10.5x and a target of below 1x, then below zero net leverage longer term; the cellular modules divestiture is expected to close in fiscal Q4, pending regulatory clearances • Stock reaction: shares fell 10.0% to close at $144.21 on Oct 15, after trading down nearly 17% intraday, as the FY30 framework landed below elevated market hopes despite the raised near term guide; chip stocks were also weak on the day, and MACOM fell more than 10% midday following the Semtech comments • Analyst backdrop: BMO Capital had raised its target to $230 from $155 with an Outperform rating on Oct 13 ahead of the day; consensus stands at Strong Buy with an average target near $219, and no post event target changes were confirmed by the morning after TODAY No tracked events today. TOMORROW No tracked events tomorrow. REMAINING THIS WEEK Nothing remaining this week. LATER • Mon Oct 19: Five9 at Gartner IT Symposium/Xpo 2026 • Mon Oct 19: Qnity Electronics at ICPT, Gangseo, Korea • Tue Oct 20: Five9 at ServiceNow World Forum London • Tue Oct 20: Zoom Communications Investor Day, 4:00 PM, webcast on Zoom IR • Fri Oct 23: Tempus AI at ESMO 2026 • Mon Oct 26: DCD Connect MENA, Dubai, Oct 26 to 27 • Tue Oct 27: Celestica Investor Day, virtual, tied to Q3 • Tue Oct 27: DCD Investment Forum MENA, Dubai • Tue Oct 27: Macronix International Investor Day, 4:00 AM • Tue Oct 27: Guidewire Software Investor Day, 7:30 PM • Wed Oct 28: Five9 at ServiceNow World Forum Amsterdam • Wed Oct 28: Oracle Investor Day • Wed Oct 28: Investor Day, Elevate 26, 2:00 PM • Fri Oct 30: Hon Hai Precision Hon Hai Technology Day • Tue Nov 3: DCD Connect Virginia, Leesburg, VA, Nov 3 to 4 • Wed Nov 4: DCD Connect Brasil, Sao Paulo, Nov 4 to 5 • Wed Nov 4: DCD Investment Forum Brasil, Sao Paulo • Wed Nov 4: Xcelerated Compute Show Brasil, Sao Paulo, Nov 4 to 5 • Thu Nov 5: Box Investor Day, San Francisco • Fri Nov 6: Global Unichip at TSMC 2026 Japan OIP Ecosystem Forum, Tokyo • Mon Nov 9: Entegris Investor Day, 1:00 PM • Tue Nov 10: Cohu Investor Day, New York • Tue Nov 10: Flex Investor Day, Austin • Tue Nov 10: WESCO International Investor Day, Data Center Deep Dive Day, 10:00 AM • Wed Nov 11: Munters Group Capital Markets Day, Stockholm, 8:00 AM

All these stocks hit new 52 WEEK HIGHS at some point today AMD $AMD Moderna $MRNA Warner Bros. Discovery $WBD Amneal Pharmaceuticals $AMRX Teva Pharmaceutical $TEVA Semtech $SMTC Cloudflare $NET Rubrik $RBRK Valero Energy $VLO Halozyme Therapeutics $HALO HF Sinclair $DINO Marathon Petroleum $MPC Ultrapar Participações $UGP Twilio $TWLO Twist Bioscience $TWST 10x Genomics $TXG Natera $NTRA Calumet $CLMT CVR Energy $CVI Bank of Nova Scotia $BNS F5 $FFIV