Coherent lines up $50M support for Texas InP fab

Laser and photonics giant Coherent says it is set to receive $50 million in US Department of Commerce funding that will help support a huge expansion of indium phosphide (InP) wafer capacity at its state-of-the-art fab in Sherman, Texas.

Arriving via the CHIPS and Science Act passed by Congress in 2022, the “letter of intent” follows $20 million already provided through the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation.

It also comes three months after key Coherent customer Nvidia said it was investing $2 billion in both Coherent and its rival Lumentum to underpin production of photonic components seen as critical to scaling AI factories with high-speed optical interconnects.

Originally a silicon wafer fab owned by Texas Instruments, the Sherman site was acquired by Finisar back in 2017 to make VCSEL arrays for Apple smart phones. Finisar was subsequently acquired by II-VI, which then merged with Coherent.

Jensen Huang

Coherent claims that the site was the first in the world to produce optoelectronics on 6-inch InP wafers, and the company is planning to quadruple its output over the next 12 months to meet escalating demand for components used in AI data center links, creating 550 high-skilled jobs in the process.

Company CEO Jim Anderson said: “Semiconductor photonic devices are essential building blocks of AI infrastructure, enabling the high-speed connectivity required to move unprecedented amounts of data between processors, memory, and systems.

“This investment expands America’s capacity to manufacture critical AI-enabling technologies, creates high-value jobs, and reinforces US leadership in advanced manufacturing, photonics, and innovation.”

Bill Frauenhofer, Executive Director for Semiconductor Investment and Innovation at the Department of Commerce, added:

“InP photonics are essential for enabling high-speed data transmission within AI systems, telecommunications, and advanced networks. The CHIPS incentives will expand production capability, strengthen the US semiconductor supply chain, and accelerate the next generation of critical optical technologies.”

Joined by Nvidia CEO Jensen Huang for a “fireside chat” discussion outlining the Sherman fab expansion (see video below), Anderson commented:

“Today marks a really important milestone - not just for Coherent, but for American manufacturing, and for the future of AI infrastructure.

“I think we’re at a remarkable moment in both technology and economic history. AI is transforming industries, it’s transforming economies, and societies at an unprecedented pace. AI runs on compute…but it scales on connectivity. And Sherman is where that connectivity is getting built.”

AI revolution

Huang described the AI infrastructure challenge as “the ultimate distributed computing problem”, adding:

“We have to connect millions of processors across entire data centers to work as one. The only way to solve that problem [at distance] is with silicon photonics and optics. Optical interconnects are fundamental to our ability to scale out.”

For existing AI infrastructure, Coherent provides Nvidia with pluggable optical transceivers built around InP lasers that move data between racks across the data center floor, where copper now represents a slower and more power-hungry option.

Similar modules now help enable Nvidia’s “Spectrum-X Photonics” and “Quantum-X Photonics” optical switches that are built around more advanced co-packaged optics solutions, for which Coherent provides an external laser module.

Moving to production of InP components on 6-inch wafer substrates from smaller sizes offers a dramatic increase in output while also helping device yields by reducing the overall incidence of edge effects, but it also demands a massive investment in production equipment and process monitoring that has now been justified by the AI boom.

Before stopping with Anderson to sign a steel beam that will form part of the newly built Sherman fab, Huang commented on his expectations of the wider impact of the anticipated AI revolution, saying:

“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.”