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Coherent Breaks Ground on Texas InP Fab With NVIDIA's $2B

4 sources tracking this story
nvidia jensen huang chips ai infrastructure chips ai-infrastructure chips-act

Key insights

  • The $50M CHIPS Act award is a Letter of Intent; a binding funding agreement must still be separately negotiated and signed before any funds disburse.
  • Sherman, Texas already operates the world's only volume-production 6-inch InP platform; the expansion doubles floor space and quadruples wafer output within 12 months.
  • NVIDIA's multibillion-dollar procurement commitment, confirmed in Coherent's press release, makes Vera Rubin Ultra NVL576 cluster build schedules directly dependent on this single facility's ramp.

Why this matters

Three independent sources — Coherent's own press release, the Commerce Department's NIST announcement, and semiconductor trade press — confirm the same sequence: a Letter of Intent that requires a separate binding funding agreement before the $50M disburses, meaning capital is committed but not yet flowing. The Sherman facility's status as the world's only volume-production 6-inch InP platform means there is no domestic fallback if the expansion slips. NVIDIA's multibillion-dollar procurement commitment, announced in March, converts Coherent's output into a direct production dependency for Vera Rubin Ultra NVL576 cluster builds, concentrating AI optical supply risk in one Texas facility. Commerce Department framing elevates InP photonics from a vendor relationship to a named national security supply chain gap, bracketing this investment alongside logic and memory fabs in federal semiconductor policy.

Summary

Coherent broke ground on an expanded indium phosphide facility in Sherman, Texas, with NVIDIA CEO Jensen Huang attending. The site is the world's first volume production 6-inch InP fab, and moving from 3-inch to 6-inch wafers roughly quadruples usable area per run. Essentially: Coherent and NVIDIA are building domestic supply for the optical components dense GPU clusters need to scale. - $50 million CHIPS Act grant, plus approximately $17 million in prior Texas state and local support. - More than 550 direct jobs at full capacity, thousands of indirect ones. - March 2026: NVIDIA invested $2 billion in Coherent and committed a multibillion-dollar purchase of laser and optical networking products under a multiyear partnership. Those components feed NVIDIA's Spectrum-X Photonics and Quantum-X Photonics switches, including the 576-GPU Vera Rubin Ultra NVL576 system spanning eight racks.

Potential risks and opportunities

Risks

  • If the Sherman facility takes multiple years to reach full 6-inch InP capacity, NVIDIA's Spectrum-X Photonics and Quantum-X Photonics product lines could face optical component shortfalls before domestic supply is online.
  • NVIDIA's concentrated $2 billion investment in a single optical supplier creates single-point exposure if Coherent encounters manufacturing yield problems or financial strain during the production ramp.
  • AI hardware buyers without NVIDIA's purchase commitment may find themselves deprioritized for Coherent's InP output, reintroducing foreign supplier dependence that the Sherman facility was designed to reduce.

Opportunities

  • U.S. silicon photonics transceiver assemblers integrating Coherent's domestically produced InP lasers gain a credible made-in-America supply chain argument for government and defense AI procurement contracts.
  • The Sherman Economic Development Corporation and Texas CHIPS program, having anchored the Coherent facility, are positioned to attract adjacent compound semiconductor and optical packaging suppliers to the area.
  • AI hardware companies beyond NVIDIA now have a U.S. volume InP fab to negotiate with for optical supply, potentially reducing industry-wide dependence on Asian optical component manufacturers.

What we don't know yet

  • No completion or production-start date given for the Sherman expansion; the article covers groundbreaking only, not when the 550-plus direct jobs will be fully in place.
  • Whether NVIDIA's $2 billion investment and multibillion-dollar purchase commitment grant it supply priority over other optical networking buyers during the capacity ramp phase.
  • Unclear whether Coherent's 6-inch InP output is already allocated to NVIDIA's existing product roadmap or will also be available to third-party optical networking customers.

What others are reporting

Coverage cluster as of 8h after publish

  1. NIST / Commerce Department Read →

    Government primary source; frames InP photonics as a national security supply chain gap and connects the expansion to U.S. AI economic competitiveness goals under CHIPS.

    Indium phosphide photonics are essential for enabling high speed data transmission within AI systems, telecommunications, and advanced networks.
  2. GlobeNewswire (Coherent Corp) Read →

    Company primary source; adds job creation detail (1,000+ total, 550+ direct advanced manufacturing roles) and confirms the NVIDIA partnership as the demand anchor for the expansion.

    Semiconductor photonic devices are essential building blocks of AI infrastructure, enabling the high-speed connectivity required to move unprecedented amounts of data.
  3. Semiconductor Today Read →

    Trade press; surfaces Jensen Huang's on-the-record framing of optical interconnect as load-bearing AI infrastructure, not a peripheral component, and ties the expansion to geopolitical AI competition.

    Connecting millions of GPUs into one thinking machine requires optical technology built for scale, speed, and energy efficiency.

Originally reported by nvidia.com

Read the original article →

Original headline: Jensen Huang Breaks Ground on NVIDIA-Coherent InP Optical Chip Factory in Texas; $50M CHIPS Act Grant Secured