Coherent broke ground today on an expanded manufacturing building in Sherman, Texas. The company makes the lasers, optical components and compound semiconductors that wire AI systems together and runs what it calls the world's first 6-inch indium phosphide fab. NVIDIA founder and CEO Jensen Huang and Coherent CEO Jim Anderson were on hand for the ceremony, joined by Sherman Mayor Shawn Temann and Adriana Cruz, executive director of Texas Economic Development and Tourism.

The expanded building will scale production of indium phosphide wafers that carry data between chips, servers and data centers at the speed of light, forming the optical backbone of modern AI infrastructure. As part of today's event, Coherent announced a $50 million CHIPS Act grant to help finance the expanded Sherman facility, building on roughly $17 million in earlier support from the Texas CHIPS program and the Sherman Economic Development Corporation. The public CHIPS Act program was funded at roughly $50 billion to bring chip manufacturing back to the U.S.

NVIDIA's own commitment to produce up to $500 billion of AI infrastructure in the U.S. through industry partnerships with new sites in Arizona and Texas adds private-sector momentum. In March, NVIDIA deepened its relationship with Coherent into a multiyear strategic partnership, investing $2 billion to support R&D, future capacity and U.S.-based manufacturing, alongside a multibillion-dollar purchase commitment for advanced laser and optical networking products.

During remarks at the ceremony, Huang said AI is the ultimate general-purpose technology because intelligence and the ability to process information and solve problems affect every single industry. At the groundbreaking, Huang explained that when 576 GPUs span eight racks as they will in NVIDIA's Vera Rubin Ultra NVL576 system, copper cannot carry the signal across that distance. To connect hundreds of thousands of processors separated by hundreds or thousands of feet across a data center, silicon photonics is the only solution. As signaling rates climb, the reach of a metal trace shrinks, and copper connections would burn power on retimers and signal conditioning that a data center would rather spend on compute. Optics require a one-time penalty to move from electrical to light, but once paid, distance is nearly free, and at NVL576 scale, light is the most power-efficient option.

Compound semiconductors like indium phosphide and gallium arsenide, the materials behind the high-speed networking and optical interconnects that modern AI runs on, have had thin domestic supply chains for years. The tour and fireside chat with Huang and Anderson showed how this gap is closing. Sherman, a city of roughly 45,000 people an hour north of Dallas, has become the latest dateline for the AI era, emblematic of a boom built as much on manufacturing muscle as on software. When the site reaches full capacity, it will support more than 550 direct jobs and thousands of jobs, direct and indirect.

The semiconductor laser was born in U.S. labs, with Bell Labs demonstrating a room-temperature version in 1970, before the technology and its manufacturing largely migrated overseas. Coherent was founded as a manufacturing company in 1971 and has remained a U.S. manufacturing company. After 50 years, the most advanced 6-inch indium phosphide line in the world is now in Sherman. The world's InP production has been stuck on 3- and 4-inch wafers, producing lower yields and far fewer components per run. Moving to 6-inch wafers roughly quadruples the usable area of a 3-inch wafer, driving down cost and unlocking the volume the AI buildout demands. It took 50 years to build the first line, but in one year they have quadrupled capacity, reflecting demand for accelerated computing.

Today, indium phosphide travels inside Coherent's pluggable optics, transceivers about the size of a USB stick that plug into the front of NVIDIA networking switches and move data between racks across the data center floor. Each module carries an indium phosphide laser. Those same modules now enable NVIDIA Spectrum-X Photonics and Quantum-X Photonics switches with co-packaged optics. As NVIDIA works to keep optics from becoming the next bottleneck, demand for those lasers continues to climb.