Coherent Corp. signed a letter of intent on June 16 to receive up to $50 million in federal CHIPS Act funding to expand its 6-inch indium phosphide manufacturing facility in Sherman, Texas, the company announced, marking a major boost to U.S. capacity for optical networking components that power AI data centers.
The expansion will double manufacturing production space and quadruple wafer production capacity at the Sherman site, according to Coherent’s press release. At project completion, the facility is expected to create more than 1,000 jobs, including over 550 direct advanced manufacturing, engineering, and technical roles.
The CHIPS award builds on approximately $20 million in support previously provided through the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation. Coherent CEO Jim Anderson said the investment reflects the critical role of photonic devices in AI infrastructure, enabling “the high-speed connectivity required to move unprecedented amounts of data between processors, memory, and systems.”
The announcement coincided with a groundbreaking ceremony held June 16 with NVIDIA, federal and state officials, and local community leaders at the Sherman facility. Coherent and NVIDIA have worked together for more than two decades; Jensen Huang, NVIDIA’s founder and CEO, said in a statement that “Coherent has been an important NVIDIA partner for more than two decades, and its expanded InP manufacturing in Texas will help strengthen the U.S. supply chain for the AI infrastructure the world is racing to build.”
Why Indium Phosphide Matters for AI
Indium phosphide (InP) is a specialized semiconductor material used to create high-performance optical networking components. InP-based photonic devices enable the high-speed optical interconnects that move data between processors, memory, and systems inside the world’s most advanced AI data centers, according to the Department of Commerce’s CHIPS Program Office. As AI workloads continue to scale, these technologies are becoming increasingly critical to overcoming data movement bottlenecks and enabling higher-performance, more energy-efficient computing architectures.
Sherman’s facility is home to the world’s first and largest volume-production 6-inch InP manufacturing platform, providing the scale needed to support rapidly growing demand for AI-driven optical interconnect technologies. The expansion will add advanced wafer fabrication equipment and cleanroom capacity to increase production of InP-based photonic devices at scale, reinforcing Sherman’s position as one of the world’s leading centers for optical networking innovation and production.
Bill Frauenhofer, Executive Director for Semiconductor Investment and Innovation at the Department of Commerce, said in the NIST announcement that “Indium phosphide photonics are essential for enabling high speed data transmission within AI systems, telecommunications, and advanced networks. The CHIPS incentives will expand production capability, strengthen the U.S. semiconductor supply chain, and accelerate the next generation of critical optical technologies.”
Sources
- Coherent Corp. Press Release — Official announcement of the $50 million CHIPS Letter of Intent, job creation targets, manufacturing expansion details, and CEO statement.
- National Institute of Standards and Technology (NIST) — Department of Commerce CHIPS Program Office announcement confirming the funding, InP technology role in AI data centers, and Commerce official statement.
- NVIDIA Blog — Confirmation of groundbreaking ceremony and Jensen Huang statement on the partnership and supply chain significance.
- Investing.com — Reporting on job creation figures and project scope.
