Coherent breaks ground on Texas facility to scale optical backbone powering NVIDIA's AI systems

Coherent Texas Facility Expansion Targets AI Infrastructure Demand

Coherent broke ground on a second manufacturing building at its Sherman, Texas campus, marking a concrete step in scaling domestic production of optical networking components critical to AI infrastructure 1

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. NVIDIA CEO Jensen Huang and Coherent CEO Jim Anderson attended the ceremony alongside Sherman Mayor Shawn Temann and Texas Economic Development officials, underscoring the strategic importance of the expansion 1

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The facility houses what Coherent describes as the world's first volume production 6-inch InP wafers manufacturing line 3

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. The expansion will double manufacturing floor space and increase indium phosphide wafers production capacity fourfold, addressing surging demand for optical interconnects for AI that enable high-speed data transfer between processors and memory systems 2

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CHIPS Act Grant Fuels Semiconductor Manufacturing Push

Coherent announced a $50 million CHIPS Act grant to help finance the new Sherman, Texas facility, building on approximately $17 million in earlier support from the Texas CHIPS program and the Sherman Economic Development Corporation 1

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[3](https://www.benzinga.com/markets/equities/26/06/53243967/nvidia-supply-chain-gets-a-boost-as-coherent- μπexPAnDS-Texas-AI-manufacturing-facility). The funding aligns with broader federal efforts through the CHIPS Act, funded at roughly $50 billion, designed to bring chip manufacturing back to the United States 1

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NVIDIA's commitment to produce up to $500 billion of AI infrastructure in the U.S. through industry partnerships adds private-sector momentum to the reindustrialization effort 1

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. The expansion is expected to create more than 1,000 jobs, including over 550 advanced manufacturing, engineering, and technical positions 2

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Silicon Photonics Replaces Copper in AI Data Centers

The Sherman facility produces lasers, optical transceivers, and photonic devices that form the optical backbone of modern AI systems 1

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. Jensen Huang explained why optical solutions are essential: when 576 GPUs span eight racks and operate as a single system—as they will in NVIDIA's Vera Rubin platform Ultra NVL576—copper cannot carry signals across that distance efficiently 1

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"AI runs on compute, but it scales on connectivity—and Sherman is where that connective tissue gets built," Jim Anderson said during the groundbreaking 1

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. As signaling rates climb, copper traces require excessive power for retimers and signal conditioning. Silicon photonics pays a one-time penalty to convert electrical signals to light, but once converted, distance becomes nearly free—making optics the most power-efficient option at scale 1

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NVIDIA AI Supply Chain Strengthens Through Strategic Partnership

NVIDIA and Coherent have collaborated for roughly two decades, but deepened their relationship in March through a multiyear strategic partnership 1

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. NVIDIA invested $2 billion in Coherent to support R&D, future capacity, and U.S.-based semiconductor manufacturing, alongside a multibillion-dollar purchase commitment for advanced laser and optical networking components 1

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Coherent's pluggable optics now power NVIDIA's Spectrum-X and Quantum-X switches, moving data at light speeds across AI data centers 4

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. Each plug carries an indium phosphide laser manufactured at the Sherman facility 4

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. The expanded facility will add new cleanroom space and wafer fabrication equipment to scale production of these AI-focused components 2

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Compound semiconductors like indium phosphide and gallium arsenide—the materials behind high-speed networking that modern advanced computing runs on—have historically had thin domestic supply chains 1

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. The Sherman expansion signals that gap is closing, positioning the facility as a critical node in the NVIDIA AI supply chain as the industry enters what experts describe as the co-packaged optics era 4

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