The Sherman expansion will quadruple wafer production capacity and create roughly 1,000 jobs, backed by CHIPS Act funding and a $2 billion NVIDIA commitment
Coherent Corp just dropped $650 million on expanding its semiconductor manufacturing facility in Sherman, Texas, a bet that the future of AI runs on light, not just electricity.
NVIDIA CEO Jensen Huang showed up to the groundbreaking ceremony alongside Coherent CEO Jim Anderson. This isn’t a courtesy visit. It’s a signal that optical interconnect technology has become mission-critical infrastructure for the AI industry.
What Coherent is actually building #
The Sherman facility houses the world’s first high-volume 6-inch Indium Phosphide production platform, which is the kind of compound semiconductor material that makes high-speed optical components possible. The expansion will double the manufacturing floor space and quadruple the facility’s wafer production capacity.
Coherent expects the project to generate approximately 1,000 new jobs. Over 550 of those will be specialized positions in advanced manufacturing, engineering, and technical roles.
The US Department of Commerce is kicking in up to $50 million through a CHIPS Act letter of intent, which functions as a preliminary funding commitment while the final terms get hammered out.
The NVIDIA relationship runs deep #
The two companies have been working together for over 20 years, according to statements made at the ceremony. On March 2, 2026, NVIDIA announced a $2 billion investment as part of a multi-year strategic agreement with Coherent, aimed specifically at advancing the optics needed for next-generation AI infrastructure. The Sherman expansion is a direct downstream consequence of that deal.
Coherent’s Indium Phosphide platform is central to producing the laser sources and optical components that make this possible. Quadrupling production capacity at Sherman positions the company to meet demand from NVIDIA’s expanding AI ecosystem.
Why this matters for investors #
Coherent Corp, trading on the NYSE under the ticker COHR, sits at a unique intersection: it’s one of the few companies with the compound semiconductor manufacturing capability to produce optical components at the scale AI infrastructure demands. The Sherman facility is described as Coherent’s largest compound semiconductor fab.
The $2 billion NVIDIA commitment announced earlier this year provides a level of demand visibility that most semiconductor companies would envy. The $650 million expansion looks less like a gamble and more like fulfilling an order book.
Coherent’s first-mover advantage in high-volume 6-inch InP production gives it a manufacturing moat that competitors can’t replicate overnight. Building compound semiconductor fabs is expensive, technically demanding, and slow.
The risk, as always with capacity expansions of this magnitude, is execution. Doubling floor space and quadrupling production while maintaining yield rates on a complex compound semiconductor platform is non-trivial. Any delays or quality issues could create supply chain ripple effects that reach all the way to NVIDIA’s data center customers.
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