NVIDIA Partner Coherent Expands Texas AI Semiconductor Fab

Coherent has broken ground on its expanded manufacturing building in Sherman, Texas, US, marking a significant step forward for AI infrastructure development. 

The company produces the lasers, optical components and compound semiconductors that connect AI systems and operates what it calls the world’s first six-inch indium phosphide (InP) fab. 

The expansion comes after NVIDIA announced in March 2026 that it was investing US$2bn in Coherent to expand supply, deepen R&D and advance US-based manufacturing. This partnership highlights the growing importance of optical interconnect technology as AI systems scale to unprecedented sizes.

The Sherman facility

Coherent’s site in Sherman is a manufacturing facility that builds six-inch compound InP semiconductors, which are the materials behind the high-speed networking and optical interconnects that AI runs on. These components have become increasingly critical as data centres struggle with the limitations of traditional copper-based connections.

“Coherent is a world-class company, and the work you do is vital to our future, vital to the future of AI and vital to reindustrialising the United States,” says NVIDIA CEO Jensen Huang.

At project completion, the Sherman site is expected to create more than 1,000 jobs, including more than 550 direct advanced manufacturing, engineering and technical roles, positioning Texas as a hub for next-generation semiconductor production.

Funding and expansion details

At the ground-breaking event on 16 June, Coherent announced a US$50m CHIPS Act grant to help finance the expanded Sherman facility, building on roughly US$17m in earlier support from the Texas CHIPS programme and the Sherman Economic Development Corporation. 

The expansion will add advanced wafer fabrication equipment and cleanroom capacity to increase production of InP-based photonic devices.

According to Coherent, the expansion will double manufacturing production space and quadruple wafer production capacity, significantly increasing domestic production of critical AI-enabling technologies and reinforcing American leadership in the technologies that power the AI economy.

“Today marks an important milestone, not just for Coherent, but for American manufacturing and for the future of AI infrastructure,” said Jim Anderson, CEO of Coherent.

Silicon photonics solving data centre challenges

To connect hundreds of thousands of processors separated by hundreds or thousands of feet across a data centre, the only way to solve that problem is silicon photonics, Jensen explained at the event. 

The technical limitations of copper cabling become increasingly apparent as AI systems scale.

For example, in NVIDIA Vera Rubin Ultra NVL576, which links eight NVLink racks of 72 NVIDIA Rubin Ultra GPUs into one 576-GPU domain, copper can’t carry the signal across that distance. 

As signalling rates climb, the reach of a metal trace shrinks and spanning eight racks in copper would burn power on retimers and signal conditioning that a data centre would rather spend on compute.

According to NVIDIA, at the scale of its NVL576, light is the most power-efficient option. It has worked with Coherent for nearly two decades to develop these optical solutions.

“AI factories are the infrastructure of the new industrial revolution,” Jensen says. “Connecting millions of GPUs into one thinking machine requires optical technology built for scale, speed and energy efficiency. 

“Coherent has been an important NVIDIA partner for more than two decades, and its expanded InP manufacturing in Texas will help strengthen the US supply chain for the AI infrastructure the world is racing to build.”