Coherent (COHR) Wins Up To $50 Million For Texas AI Chip Expansion

Bailey Pemberton Wed, June 17, 2026 at 3:14 AM EDT 4 min read Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Coherent (NYSE:COHR) announced a letter of intent to receive up to US$50 million in CHIPS and Science Act funding. The funding will support expansion of its Indium Phosphide semiconductor facility in Sherman, Texas. The project is expected to double production space, increase wafer capacity by 4x, and create more than 1,000 jobs. Coherent also highlighted a deeper partnership with NVIDIA focused on AI datacenter infrastructure. For investors tracking Coherent, this CHIPS Act award and facility expansion highlights the company's role in Indium Phosphide based components that are used in optical and AI hardware. The Sherman, Texas project is tied to demand for AI datacenter connectivity and high speed photonics, which has become a key focus area for large chipmakers and cloud providers. The closer alignment with NVIDIA gives Coherent a more defined position within the AI supply chain, from optical interconnects to critical photonic components. Readers may want to monitor the pace of the Sherman capacity buildout, the extent to which that capacity is backed by long term agreements, and the implications for Coherent's capital allocation and risk profile. Stay updated on the most important news stories for Coherent by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on Coherent. NYSE:COHR Earnings & Revenue Growth as at Jun 2026 We've flagged 3 risks for Coherent. See which could impact your investment. For Coherent, the proposed US$50 million in CHIPS Act funding and the Sherman, Texas expansion sharpen its role as an Indium Phosphide supplier to AI datacenters, while the deeper NVIDIA partnership anchors that capacity to a specific customer group. The combination of federal, state, and local support reduces some project-financing pressure for a capital-intensive buildout that is intended to quadruple wafer output. At the same time, scaled InP manufacturing may matter for competitive positioning against optical peers such as Lumentum, Applied Optoelectronics, and Marvell that are also targeting AI connectivity. The trade-off for investors is that higher fixed costs and concentrated partnerships can increase execution risk if demand timing or product mix shifts. How This Fits Into The Coherent Narrative The Sherman expansion and CHIPS funding directly link to the narrative's focus on internal manufacturing scale in Texas and supply resilience for AI-focused photonics. The reliance on large hyperscaler partners such as NVIDIA reinforces the narrative's customer-concentration risk, especially if order patterns or design choices change. The explicit public funding support and domestic supply-chain angle are not fully reflected in the narrative, yet they may influence long-term cost structure, geopolitical risk, and capacity planning.