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The Department of Commerce’s CHIPS Program Announces a Letter of Intent with Coherent for up to $50 Million to Expand Indium Phosphide Production

National Institute of Standards and Technology (.gov)· June 20, 2026

The U.S. Department of Commerce has signed a non-binding letter of intent to provide up to $50 million in direct funding to Coherent Corp. under the CHIPS and Science Act. This investment aims to expand the production of Indium Phosphide (InP) semiconductors at the company's facility in Sherman, Texas, which is the world's largest high-volume 150mm InP manufacturing site. The project is critical for the semiconductor sector as it supports the high-speed optical interconnects required for advanced AI data centers and telecommunications infrastructure.

The proposed $50 million in CHIPS Act funding is designated to support the expansion of Coherent’s manufacturing capabilities in Sherman, Texas. This facility stands as the first and largest high-volume 150mm (6-inch) Indium Phosphide (InP) semiconductor plant globally, serving as a hub for the company's photonics innovation. By adding advanced wafer fabrication equipment and increasing cleanroom capacity, Coherent intends to scale the production of InP-based photonic devices to meet the rising global demand across industrial and communications markets.

Indium Phosphide technology is a cornerstone of modern high-speed data transmission, specifically enabling optical interconnects that facilitate data movement between processors and memory systems. As artificial intelligence workloads continue to scale, these photonic devices are becoming vital for eliminating data bottlenecks within advanced data centers. The expansion is expected to foster higher-performance and more energy-efficient computing architectures, which are essential for the next generation of AI development.

Beyond technological advancement, the investment is projected to create high-skilled manufacturing jobs in Sherman and strengthen the domestic supply chain for critical photonics technologies. Bill Frauenhofer, Executive Director for Semiconductor Investment and Innovation at the Department of Commerce, emphasized that InP photonics are essential for enabling high-speed data transmission within AI systems, telecommunications, and advanced networks. He noted that the CHIPS incentives will expand production capability and accelerate the next generation of critical optical technologies while bolstering U.S. semiconductor resilience.

Read the full story at National Institute of Standards and Technology (.gov)

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