Lasers are the Heartbeat of Optical AI Data Centers: Coherent Dramatically Scales InP Production

Semiconductor Engineering USA

Overview

Indium Phosphide (InP) lasers are pivotal in optical interconnects for AI data centers. While most scale-out data currently uses laser-driven pluggable transceivers, Co-Packaged Optics (CPO) is beginning to replace copper for scale-up. Coherent, a leading supplier of InP CW UHP DFB lasers, is doubling its InP production capacity in 2026 and again in 2027, transitioning to industry-first 6-inch InP wafers to meet surging AI data center CAPEX and the shift to CPO.

In Depth

The Indispensability of Lasers in AI Data Centers

The explosive growth of AI data centers has dramatically increased demands for data transfer volume and speed. Within this context, optical interconnects, particularly laser diodes, play a crucial role as the “heartbeat” that converts information into optical signals and transmits them throughout the data center. Since silicon itself does not emit light, high-performance external light sources—lasers—are indispensable for maximizing the performance of silicon photonics integrated circuits.

Strategic Significance of Indium Phosphide (InP) Lasers

Currently, Indium Phosphide (InP)-based lasers hold an extremely critical position in optical interconnects for AI data centers. Specifically, high-power continuous-wave (CW UHP) Distributed Feedback (DFB) lasers provide high output, reliability, and high-speed modulation capabilities in next-generation optoelectronic integration architectures like Co-Packaged Optics (CPO) and Near-Packaged Optics (NPO). These characteristics are decisive factors in realizing the ultra-high-speed, low-latency data transfer required by AI workloads.

Coherent’s Major Scale-Up in InP Production and Transition to 6-inch Wafers

As a leading supplier of InP CW UHP DFB lasers, Coherent is making substantial investments to address the massive market trends of surging AI data center CAPEX and the transition to CPO. The company has announced ambitious plans to double its InP production capacity in 2026 and double it again in 2027. Central to this expansion plan is the industry’s first transition to 6-inch InP wafers. Compared to conventional smaller diameter wafers, 6-inch wafers will significantly improve production efficiency and cost competitiveness, key to accelerating the stable supply and mass production of InP lasers.

Industry Impact and Future Outlook

As the supply capacity of InP lasers is becoming a bottleneck for AI data center growth, Coherent’s massive capital expenditure and technological innovation are extremely critical for supporting overall industry growth. A stable supply of high-performance InP lasers will accelerate the adoption of CPO/NPO, which integrates AI chips and optical engines, contributing to improved power efficiency and performance in AI data centers. Future challenges include ensuring a stable supply of InP lasers, reducing costs, and addressing maintainability issues in CPO in the event of laser failure. Nonetheless, Coherent’s initiatives will be an indispensable factor in shaping the optical infrastructure of the AI era.