Coherent Texas Expansion Puts AI Optics Into The Compute Bottleneck
Coherent has broken ground on an expanded Sherman, Texas facility for indium phosphide optics, backed by a $50 million CHIPS Act grant and NVIDIA’s $2 billion strategic investment.
Coherent Breaks Ground On AI Optics Capacity In Texas
Coherent has started construction on an expanded manufacturing building in Sherman, Texas, giving NVIDIA’s AI infrastructure supply chain a more visible domestic optics anchor.
The facility is meant to scale production of indium phosphide wafers used in lasers, transceivers and optical modules.
Those parts carry data between chips, servers and data centers when copper links become too power-hungry or too short for larger AI systems.
The funding stack is part of the story.
Coherent announced a $50 million CHIPS Act grant for the Sherman expansion.
That federal award sits alongside roughly $17 million already provided by Texas CHIPS program and Sherman Economic Development Corporation channels.
NVIDIA has also tied Arizona and Texas industry partnerships to a U.S. AI-infrastructure production commitment of up to $500 billion.
Copper Becomes A Constraint At Rack Scale
The technical pressure is clearest in NVIDIA’s Vera Rubin Ultra NVL576 design.
The system links 576 GPUs across eight racks, with eight NVLink racks of 72 NVIDIA Rubin Ultra GPUs operating as one domain.
At that scale, Jensen Huang said copper cannot carry signals across the required distance without spending power on retimers and signal conditioning.
Silicon photonics changes the trade-off: the system pays the cost of moving from electricity to light, then sends data across the data center floor with far less distance penalty.
That is why Coherent’s Sherman work is more than a factory ribbon-cutting.
The plant makes the compound-semiconductor materials behind the optical interconnects that large AI clusters need as networking becomes as important as compute.
CHIPS Funding Meets A Two-Decade Supplier Relationship
NVIDIA and Coherent have worked together for roughly two decades.
In March, they expanded that relationship into a multiyear strategic partnership, with NVIDIA investing $2 billion in Coherent for R&D, future capacity and U.S.-based manufacturing.
The deal also gives NVIDIA a future supply path for advanced lasers and optical-networking equipment through a purchase commitment valued in the multibillion-dollar range.
Coherent says the Sherman site will support more than 550 direct jobs when it reaches full capacity.
The city, with roughly 45,000 people, is becoming part of the industrial geography behind AI infrastructure, not just a location for a component supplier.
The Manufacturing Bottleneck Moves To Photonics
Coherent describes the Sherman operation as the world’s first 6-inch indium phosphide fab.
Jim Anderson said the company was founded as a manufacturing business in 1971 and still sees the Texas line as central to U.S. manufacturing depth.
The wafer size matters because indium phosphide production has lagged mainstream silicon fabs.
Coherent says 6-inch wafers can produce more usable area than smaller InP wafers, lowering cost and helping volume rise for pluggable optics and co-packaged optical systems.
The unresolved issue is delivery at AI-cluster scale.
NVIDIA and Coherent have money, purchase commitments and a construction milestone in place; now the Sherman expansion has to turn optics from a specialist component into enough manufacturing capacity for larger AI data centers.
