How Coherent and NVIDIA are Scaling Data Centre Connectivity - Data Centre Magazine

Coherent is expanding its manufacturing capacity in Sherman, Texas, to boost production of indium phosphide (InP) semiconductors critical for optical networking in AI data centers. This move supports ... Read original →

Coherent’s InP fab expansion in Sherman isn’t just capacity scaling—it’s a direct response to AI clusters hitting the physical limits of copper interconnects. As GPU nodes shrink below 3nm, optical I/O transitions from optional to mandatory, triggering ripple effects across packaging, test infrastructure, and photonic-aware EDA tools. The $50M CHIPS grant plus NVIDIA’s $2B commitment effectively erects a U.S.-centric photonics supply firewall, mitigating geopolitical disruption risks but inflating near-term COGS by 15–20%. Competitors like Lumentum and Taiwan-based AXT will likely accelerate silicon photonics pivots or seek licensing deals. Within 18 months, optical interconnects will migrate from data center peripheries into AI training fabric cores, driving EUV adoption in compound semiconductors and potentially standardizing the first photonic PDK framework.