Coherent is opening a Texas facility for silicon photonics manufacturing to supply optical interconnects for large-scale GPU datacenters.

Coherent, a key supplier of NVIDIA's AI stack, has commenced expansion of its wafer fabrication plant in Sherman, Texas, delivering the next generation of optical solutions. According to NVIDIA, Coherent is responsible for making lasers, optical components, and compound semiconductors that wire AI systems together—essentially optical fabrics. With the new facility, Coherent plans to expand production of its InP (6-inch indium phosphide) wafers that will carry data between chips, servers, and data centers, a crucial step for NVIDIA as it races towards achieving Silicon Photonics dominance with Co-Packaged Optical solutions.

The Coherent fab will be financed through a $50 million CHIPS Act grant, building upon the $17 million already supported through the Texas CHIPS program and the Sherman Economic Development Corporation. This initiative delivers on the promise of "Made in US" and aligns with NVIDIA's commitment to producing up to $500 billion of AI infrastructure on US soil.

The shift to optical solutions becomes necessary at scale. NVIDIA illustrates this with the example of 576 GPUs spanning across eight racks operating as a single system, similar to how NVIDIA's next-generation Vera Rubin Ultra NVL576 platform will function. At this scale, traditional copper links prove insufficient due to higher cost, poor signals, and greater power requirements. Optical solutions require what NVIDIA characterizes as a "one-time penalty," but once paid for, the cost to transmit data is nearly free, making systems like the NVL576 with optics significantly more power-efficient.

Coherent's pluggable optics already power NVIDIA's networking switches, moving data at light speeds with each plug carrying an Indium Phosphide laser. These components are currently deployed across NVIDIA's Spectrum-X and Quantum-X photonics switches. As the world enters the Co-Packaged Optics era, NVIDIA is scaling AI datacenter deployments globally through partnerships with suppliers like Coherent.