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

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

Key insights

  • The $50M CHIPS commitment is a Letter of Intent; Coherent and Commerce must still conclude a binding funding agreement before any disbursement.
  • Jensen Huang stated the Sherman facility will reach four times its current wafer output within one year of the groundbreaking.
  • Federal funding split across administrations: Biden committed $33M, Trump's administration added $17M to reach the $50M total.

Why this matters

The $50M CHIPS Act commitment, confirmed by both Coherent's press release and the Commerce Department's NIST announcement, is structured as a Letter of Intent, meaning a binding funding agreement must still be negotiated before funds are disbursed. The Sherman, Texas site is already the world's only volume 6-inch InP manufacturing platform; the expansion doubles its floor space and quadruples wafer output, with Jensen Huang pledging that milestone is reached within one year. NVIDIA's multibillion-dollar purchase commitment makes Coherent's Texas output a direct production input to Vera Rubin Ultra NVL576 cluster builds, concentrating both the upside and supply risk of domestic optical scale-up in one facility. The project drew bipartisan federal backing, with $33M from the Biden administration and $17M added by Trump's, plus roughly $20M in prior Texas state and local support before the federal grant was announced.

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 2h after publish

  1. NIST / U.S. Department of Commerce Read →

    Official government source. Confirms the $50M is an LOI requiring a binding agreement before disbursement; frames InP photonics as solving AI's internal data-movement bottleneck.

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

    Coherent's official press release. Adds concrete expansion metrics: doubles floor space, quadruples wafer output, creates 1,000+ total jobs with 550+ direct advanced manufacturing roles.

    Photonic devices are essential building blocks of AI infrastructure, enabling high-speed connectivity to move unprecedented amounts of data between processors, memory, and systems.
  3. KXII (Sherman/Texoma local news) Read →

    Local Sherman, TX coverage with Jensen Huang's direct quote on production timeline; adds context on roughly $20M in prior Texas state and city support predating the federal CHIPS grant.

    In literally one year's time, we're going to four times its output.
  4. Digitimes Read →

    Trade press optical networking angle. Frames the Sherman fab within AI supply chain resilience; paywalled past the lede but headline and opening confirmed same event.

    AI infrastructure is increasingly dependent on light, and more of that technology is being built in Texas.

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