Coherent and NVIDIA Scale Data Center Connectivity: Texas InP Fab Quadruples Wafer Production with $2B NVIDIA Investment

June 28, 2026

[News/Blog] USA

Overview

Coherent is expanding its indium phosphide (InP) wafer fab in Sherman, Texas, with a major $2 billion investment from NVIDIA to quadruple wafer production capacity and secure supply for AI infrastructure. This expansion is crucial for producing optical interconnects and compound semiconductors used in NVIDIA’s AI platforms, such as the Vera Rubin Ultra NVL576, which require optical links due to the bandwidth and power limits of copper.

In Depth

Key Findings

Coherent is significantly expanding its indium phosphide (InP) wafer fabrication facility in Sherman, Texas, following a substantial $2 billion strategic investment from NVIDIA. This expansion aims to quadruple InP wafer production capacity, securing a vital supply of optical interconnects and compound semiconductors essential for AI infrastructure.

Technical and Market Details

Indium phosphide (InP) is a critical compound semiconductor material, indispensable for manufacturing laser diodes and modulators due to its superior light-emitting properties and high-speed modulation capabilities. It plays a central role in realizing high-efficiency optical signal generation and transmission in ultra-high-speed optical modules, such as 800G, 1.6T, and future 3.2T components, required by AI data centers. NVIDIA’s next-generation AI platforms, like the Vera Rubin Ultra NVL576, necessitate immense data transfer speeds between GPUs. Traditional copper interconnects face physical limitations in terms of bandwidth and power consumption, making optical links indispensable. Thus, Coherent’s InP technology is a crucial component in NVIDIA’s AI strategy.

This factory expansion will dramatically boost Coherent’s supply capabilities for InP-based components required for high-density, low-power optical engines used in AI accelerators and switching ASICs. This is also vital for accelerating the adoption of advanced optical technologies like Co-Packaged Optics (CPO) and Near-Package Optics (NPO) across AI data centers.

Background and Industry Context

As the scale of generative AI models expands exponentially, data centers are facing severe challenges in power consumption and cooling. AI workloads require vast amounts of data to be processed at high speeds with minimal latency among thousands of GPUs, demanding bandwidth and power efficiency that traditional electrical interconnects cannot provide. In this context, optical interconnects have become an indispensable technology for resolving computing power bottlenecks in the AI era. NVIDIA’s unprecedented direct investment in Coherent underscores the strategic value of optical components in AI growth and the critical importance of securing their supply.

Strategic Significance and Outlook

Coherent’s quadrupling of InP manufacturing capacity will significantly impact the supply of optical interconnects for AI data centers, accelerating the build-out of AI infrastructure globally. The close collaboration with NVIDIA will drive the development and production of high-performance optical components tailored to the needs of next-generation AI platforms, fostering further advancements in AI technology and its application across various industries. This investment reaffirms the importance of compound semiconductor manufacturing and clearly demonstrates that optical technology plays a central role at the forefront of the AI revolution.

Source: https://datacentremagazine.com/news/coherent-nvidia-break-ground-at-texas-semiconductor-site

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