Coherent (COHR) Stock Could Be 77% Overvalued After CHIPS Act Funding News - simplywall.st

Coherent (COHR) is back in focus after securing up to US$50 million in funding under the CHIPS and Science Act to expand its indium phosphide semiconductor facility in Sherman, Texas. Despite a strong... Read original →

Coherent’s $50M CHIPS Act award masks a severe valuation disconnect: its InP fab expansion targets critical bottlenecks in 800G/1.6T transceivers, yet 6-inch yield ramp remains unproven against hyperscalers’ aggressive deployment timelines. Technically, indium phosphide is irreplaceable for high-speed modulation—forcing upgrades across MOCVD and epitaxy supply chains—but the U.S. lacks a mature compound semiconductor ecosystem, inflating costs and delivery risk. Rivals like Lumentum are accelerating silicon photonics integration, potentially locking in key AI infrastructure clients. If cloud capex slows or NVIDIA’s GB200 rollout decelerates within 12–24 months, Coherent’s $389 share price—priced for perfection—faces sharp correction. The real test isn’t funding access, but achieving >40% InP wafer cost reduction by 2027.