Coherent has commenced construction on an expanded manufacturing building in Sherman, Texas, aimed at scaling the production of optical components essential for artificial intelligence infrastructure. The groundbreaking ceremony was attended by NVIDIA founder and CEO Jensen Huang, Coherent CEO Jim Anderson, Sherman Mayor Shawn Temann, and Adriana Cruz, executive director of Texas Economic Development and Tourism.
The new facility will increase output of indium phosphide wafers, which serve as the optical backbone for connecting chips, servers, and data centers. Coherent operates what it describes as the world’s first 6-inch indium phosphide fabrication plant. The company manufactures the lasers, optical components, and compound semiconductors that link AI systems together.
To finance the expansion, Coherent announced a $50 million grant from the CHIPS Act. This funding builds upon approximately $17 million in prior support from the Texas CHIPS program and the Sherman Economic Development Corporation. The CHIPS Act, funded at roughly $50 billion, was established to bring chip manufacturing back to the United States.
Huang described AI as a general-purpose technology that affects every industry. He noted that as signaling rates increase, the reach of metal traces shrinks, making copper impractical for connecting hundreds of thousands of processors across large data centers. He explained that silicon photonics offers a power-efficient solution by moving data via light, which reduces the need for energy-intensive signal conditioning over long distances.
NVIDIA and Coherent have collaborated for approximately two decades. In March, the companies deepened their relationship through a multiyear strategic partnership. Under this agreement, NVIDIA is investing $2 billion in Coherent to support research, development, and U.S.-based manufacturing, alongside a multibillion-dollar purchase commitment for advanced laser and optical networking products. NVIDIA has also committed to producing up to $500 billion of AI infrastructure in the U.S. through partnerships in Arizona and Texas.
