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Jensen can't risk semiconductor supply chains derailing the AI hype train

As AI systems grow larger, optics are playing a larger part in their design – so much so that at Computex earlier this month, Nvidia CEO Jensen Huang proclaimed the technology would make Marvell the next trillion dollar company. Now, Nvidia-backed photonics vendor Coherent plans to boost indium phosphide (InP) wafer production at its Sherman, Texas, fab by 4x in anticipation AI proliferation will trigger an explosion in optical interconnect demand.

Supply chains must be ready to meet that demand when (or if) it materializes, and Coherent is one such supplier. The company operates eight wafer fabs across the US that produce semiconductors used in laser light sources and optical modules.

These supply chains are so important to Nvidia’s future growth that, in March, the GPU slinger invested $2 billion in the optics vendor to bolster its production capacity. Coherent is wasting little time putting those funds to use.

Along with $20 million in funding from the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation, and up to $50 million in CHIPS and Science Act funding, Coherent plans to plow $650 million into its Sherman plant, effectively doubling the factory’s footprint and quadrupling InP wafer output.

InP semis are commonly employed in lasers, photodetectors, and modulators found in optical interconnects.

As rack scale AI systems grow from a few dozen accelerators to hundreds or thousands, copper is no longer sufficient and optics are now required to achieve this scale. We expect this trend to dramatically increase the number of optical components employed by these systems over the next couple of years.

Coherent claims that the Sherman expansion will create about 1,000 new jobs, roughly 550 of which are directly related to advanced manufacturing, engineering, and technical roles. The company hasn't shared a timeline for when the expansion will be completed. We've reached out for comment and will let you know if we hear anything back.

Coherent is not the only optics vendor Nvidia is bankrolling. This spring, GPUzilla also invested $2 billion in Lumentum, which produces a variety of optical products used in datacenters including pluggable transceivers, optical circuit switches, and laser modules.

Less than a month later, Nvidia plowed another $2 billion into Marvell in part to accelerate its silicon photonics roadmap. ®