Coherent Corp Secures $50 Million CHIPS Funding for Texas InP Fab Expansion

In June 2026 the U.S. Department of Commerce’s CHIPS Program Office signed a letter of intent to provide Coherent Corp. with up to $50 million for expanding its 150 mm (6-inch) indium phosphide (InP) fab in Sherman, Texas – the nation’s first and largest high-volume InP site. Coherent and Nvidia broke ground the same day, starting construction that will double floor space and quadruple wafer output.

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The award follows the CHIPS and Science Act, which earmarks federal resources for domestic semiconductor manufacturing. It builds on roughly $20 million previously granted by the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation, bringing total public financing to about $70 million.

The National Institute of Standards and Technology

The expansion will double floor area, add advanced wafer-fab equipment and clean-room capacity, and quadruple wafer production. The upgraded plant will produce InP-based lasers and other photonic components for AI data centers. The $70 million public investment is expected to generate high-skill manufacturing jobs in Sherman.

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Indium phosphide photonics enable optical interconnects that move data between processors, memory and storage in AI systems. Expanding domestic InP production reduces reliance on foreign sources, strengthens the U.S. photonics supply chain, and meets growing demand for optical networking that underpins AI workloads.

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The Department of Commerce said the CHIPS incentives will broaden U.S. production capability and accelerate next-generation optical technologies. Coherent’s CEO called the funding a milestone for American manufacturing and AI infrastructure. Nvidia’s CEO highlighted the four-fold output increase, linking it to the AI connectivity challenge.

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• “Indium phosphide photonics are essential for enabling high speed data transmission within AI systems, telecommunications, and advanced networks,” — Bill Frauenhofer, Executive Director, Semiconductor Investment and Innovation, Department of Commerce

The National Institute of Standards and Technology

• “I think today marks a really important milestone, not just for Coherent, but for American manufacturing and for the future of AI infrastructure,” — Jim Anderson, CEO, Coherent Corp.

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• “In literally one year’s time, we’re going to four times its output. We’re going to 4X its output,” — Jensen Huang, President and CEO, Nvidia

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• “AI runs on compute, but it scales with connectivity. And Sherman is where that connectivity is getting built,” — Jensen Huang, President and CEO, Nvidia

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Nvidia projects that the facility’s output will be four times higher within a year of the expansion’s completion. The project is also expected to create high-skill manufacturing jobs, further anchoring the U.S. photonics supply chain for AI-driven data centers.

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