Coherent Corp has signed a letter of intent for up to $50 million in direct funding under the CHIPS and Science Act to expand its 6-inch indium phosphide (InP) photonic device manufacturing facility in Sherman, Texas.
Funding and expansion details
The investment from the US Department of Commerce will double manufacturing production space and quadruple wafer production capacity at the Sherman site. The expansion is expected to create more than 1,000 jobs, including over 550 direct roles in advanced manufacturing, engineering, and technical positions.
This CHIPS award builds on approximately $20 million in prior support from the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation. Coherent is also deepening its long-standing partnership with NVIDIA, which recently expanded its collaboration with the company.
Role in AI infrastructure
Coherent’s Sherman facility operates the world’s first and largest volume-production 6-inch InP manufacturing platform. InP-based photonic devices are critical for high-speed optical interconnects that move data between processors, memory, and systems in AI data centers.
As AI workloads scale, data movement bottlenecks become a primary constraint on performance and energy efficiency. The expanded fab will add advanced wafer fabrication equipment and cleanroom capacity to produce these devices at higher volumes, directly supporting NVIDIA’s GPU clusters and next-generation computing architectures.
Strengthening domestic supply chain
The expansion enhances US-based manufacturing capacity for strategically important semiconductor photonics. Indium phosphide devices enable high-speed data transmission in AI systems, telecommunications, and advanced networks, making domestic production a supply chain priority.
Bill Frauenhofer, executive director for Semiconductor Investment and Innovation at the Department of Commerce, stated that the incentives will expand production capability, strengthen the US semiconductor supply chain, and accelerate next-generation optical technologies.
Partnership driving future growth
Coherent and NVIDIA have collaborated for more than two decades on compute and networking architectures. NVIDIA CEO Jensen Huang characterized AI factories as the infrastructure of the new industrial revolution, emphasizing that connecting millions of GPUs requires optical technology built for scale, speed, and energy efficiency.
The Sherman expansion, combined with the proposed CHIPS award and NVIDIA partnership, positions Coherent to meet accelerating demand for AI infrastructure while reinforcing America’s role in the global supply chain for advanced photonics, optical networking, and next-generation computing.
The convergence of federal investment, private-sector partnership, and scaled manufacturing capacity signals a strategic shift: photonic device production is no longer a niche capability but a foundational element of the AI economy. Coherent’s expanded InP fab will be a critical node in that infrastructure.
