Woofun AI reports that Coherent (COHR) has executed a letter of intent with the U.S. Department of Commerce to secure up to $50 million in direct funding under the CHIPS Act. This capital injection is designated for expanding the company's 6-inch Indium Phosphide (InP) semiconductor manufacturing facility located in Sherman, Texas. The strategic expansion is designed to address the surging demand for optical networking technology within AI data centers while reinforcing Coherent's deepened partnership with NVIDIA.

Upon completion, the Sherman facility is projected to generate more than 1,000 new jobs, including over 550 roles in advanced manufacturing, engineering, and technical sectors. The physical expansion will double the production space and quadruple wafer capacity, thereby strengthening the domestic photonics chip supply chain. This enhanced infrastructure aims to alleviate communication bottlenecks in large-scale AI computation by supporting high-speed data transmission needs. The initiative aligns with previous collaborations, including NVIDIA's $2 billion investment in Coherent, to drive upgrades in optical interconnect technologies for AI-centric data center operations.