Coherent Secures $50M CHIPS Award to Expand Texas InP Fab

Coherent announced a letter of intent from the U.S. Department of Commerce for up to $50 million in CHIPS and Science Act funding to expand its 6-inch Indium Phosphide (InP) semiconductor manufacturing facility in Sherman, Texas. The project is aimed at increasing domestic production of photonic devices used in high-speed optical networking systems that support AI data centers and advanced computing infrastructure.

The expansion will double manufacturing space and quadruple wafer production capacity at the Sherman site, which Coherent describes as the world’s first and largest volume-production 6-inch InP manufacturing platform. The company said the project is expected to create more than 1,000 jobs, including over 550 advanced manufacturing, engineering, and technical positions. The CHIPS funding follows approximately $20 million previously awarded through the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation.

Coherent said the expanded facility will produce greater volumes of InP-based photonic devices used in optical interconnects for AI clusters. These devices enable high-speed data transmission between GPUs, memory, and networking systems while helping reduce power consumption and alleviate data movement bottlenecks. The announcement coincides with a groundbreaking ceremony attended by NVIDIA executives, federal and state officials, and local leaders.

“AI is transforming our world and driving a new era of American manufacturing to build the infrastructure that will power the AI datacenters of the future,” said Jim Anderson, CEO of Coherent. “Semiconductor photonic devices are essential building blocks of AI infrastructure, enabling the high-speed connectivity required to move unprecedented amounts of data between processors, memory, and systems.”

🌐 Analysis

As clusters grow from thousands to millions of accelerators, moving data efficiently between processors becomes as important as the processors themselves. Indium phosphide remains one of the foundational materials used in high-performance optical transceivers, coherent optics, and photonic integrated circuits that enable these networks.

🌐 The Sherman facility occupies a unique position in the industry as the largest volume-production 6-inch InP manufacturing platform. The planned quadrupling of wafer capacity suggests Coherent expects sustained demand growth from hyperscalers, cloud providers, and AI infrastructure builders. The announcement also aligns with broader industry efforts to localize key elements of the AI supply chain inside the United States, particularly for strategic technologies such as semiconductors, advanced packaging, and photonics.

🌐 Coherent’s long-standing relationship with NVIDIA is especially noteworthy. NVIDIA’s next-generation AI systems increasingly depend on high-speed optical connectivity to scale beyond traditional rack boundaries. As networking transitions toward 800G, 1.6T, co-packaged optics, and future photonic architectures, domestic InP manufacturing capacity becomes an increasingly strategic asset. The CHIPS award reflects growing recognition that optical networking infrastructure is emerging as a national priority alongside processors and memory in the race to build AI factories.

🌐 We’re tracking the latest developments in AI Infrastructure. Follow our ongoing coverage at: https://convergedigest.com/category/ai-infrastructure