Coherent broke ground on an expanded semiconductor manufacturing facility in Sherman, Texas, supported by a $50 million
Coherent held a groundbreaking ceremony today for an expanded manufacturing building in Sherman, Texas. The company produces the lasers, optical components and compound semiconductors that connect AI systems together and operates what it calls the world's first 6-inch indium phosphide fab. NVIDIA founder and CEO Jensen Huang and Coherent CEO Jim Anderson attended the ceremony alongside Sherman Mayor Shawn Temann and Adriana Cruz, executive director of Texas Economic Development and Tourism.
The expanded building will increase production of InP wafers that carry data between chips, servers and data centers at the speed of light, forming the optical backbone of modern AI infrastructure. Huang emphasized during remarks that AI is the ultimate general-purpose technology because intelligence affects every industry. "Coherent is a world-class company, and the work you do is vital to our future, vital to the future of artificial intelligence and vital to reindustrializing the United States," Huang said.
Coherent announced a $50 million CHIPS Act grant to finance the expanded Sherman facility, building on roughly $17 million in earlier support from the Texas CHIPS program and the Sherman Economic Development Corporation. NVIDIA's separate commitment to produce up to $500 billion of AI infrastructure in the U.S. through industry partnerships adds private-sector momentum.
Compound semiconductors like indium phosphide and gallium arsenide historically have had thin domestic supply chains, but that gap is closing. Current silicon photonics technology enables optical interconnects that copper cannot achieve across large data center installations. When systems like NVIDIA Vera Rubin Ultra NVL576 span eight racks of 72 GPUs each, light becomes the most power-efficient option for moving data across that distance. As signaling rates climb and copper's reach shrinks, optics prevents energy waste on retimers and signal conditioning that data centers can redirect to compute.
NVIDIA and Coherent have worked together for roughly two decades. In March they deepened their relationship into a multiyear strategic partnership in which NVIDIA is investing $2 billion in Coherent to support research and development, future capacity and U.S. manufacturing, alongside a multibillion-dollar purchase commitment for advanced laser and optical networking products. When the Sherman facility reaches full capacity, it will support more than 550 direct jobs plus thousands of indirect jobs.
The factory manufactures lasers, transceivers and pluggable optical modules that move data across NVIDIA networking systems. As Anderson explained, each component enables a different part of the system. "AI runs on compute, but it scales on connectivity—and Sherman is where that connective tissue gets built," he said.
The semiconductor laser was demonstrated at room temperature in Bell Labs in 1970 before the technology and manufacturing largely migrated overseas. Coherent was founded in 1971 as a U.S. manufacturing company. "After 50 years, the most advanced 6-inch indium phosphide line in the world is right here in Sherman," Anderson said. Most of the world's InP production remains limited to 3- and 4-inch wafers, which yield lower outputs and far fewer components per run. Moving to 6-inch wafers roughly quadruples the usable area, driving down cost and unlocking the volume the AI buildout demands.
The core manufacturing processes are familiar—lithography, photoresist deposition, material etching, layer by layer—but the material is different. On an InP substrate, engineers grow exotic compound-semiconductor layers tuned for precise optical properties that enable chips to emit and modulate light. Today that InP travels inside Coherent's pluggable optics, transceivers about the size of a USB stick that plug into NVIDIA networking switches and move data between racks where copper cannot reach. The modules carry indium phosphide lasers and enable NVIDIA Spectrum-X Photonics and Quantum-X Photonics switches with co-packaged optics. As NVIDIA works to prevent optics from becoming the next bottleneck, demand for those lasers continues to climb. Huang concluded by reflecting on opportunity: "Ten years from now, I think we'll look back and realize AI is what made it possible to invest in sustainable energy, upgrade our energy grid and reconstitute a workforce. You can't have only information workers in an economy—you also have to have builders. We have an opportunity over the next ten years to reshape our communities and be much more balanced."