Coherent Breaks Ground on Expanded Texas Facility, Scaling AI’s Optical Backbone - NVIDIA Blog

Coherent has broken ground on an expanded manufacturing facility in Sherman, Texas, aimed at scaling its world’s first volume production 6-inch indium phosphide (InP) fab. This facility supplies criti... Read original →

Coherent’s Sherman expansion marks a strategic pivot in AI infrastructure: the shift from electrical to optical interconnects is now manufacturing reality. Scaling 6-inch indium phosphide wafers slashes laser costs for NVIDIA’s NVL576 systems and pressures TSMC and Intel to accelerate co-packaged optics. The $50M CHIPS Act grant enhances U.S. supply chain security but imposes localization mandates that inflate Coherent’s near-term capex and talent acquisition costs. NVIDIA’s $2B commitment effectively locks out rivals like AMD and Groq from cutting-edge optical bandwidth, turning photonics into a competitive moat. Within 18 months, 6-inch InP will become the de facto standard for AI data centers, setting the stage for an 8-inch transition. This isn’t just reshoring—it’s a deliberate reconfiguration of global semiconductor value chains under U.S. techno-industrial policy.