NVIDIA and Coherent Break Ground in Texas on AI Optical Bottleneck Fix: $2B Bet Backed by CHIPS Act - Tech Times

NVIDIA and Coherent have broken ground in Sherman, Texas, on a $2 billion project aimed at addressing the optical bottleneck in AI systems, backed by the U.S. CHIPS Act. The initiative focuses on expa... Read original →

NVIDIA and Coherent’s $2B InP fab in Texas isn’t just capacity expansion—it’s a strategic pivot forced by copper interconnects hitting terabit walls. This triggers cascading effects: 6-inch InP wafers will slash laser costs, accelerating CPO adoption in systems like NVL576; TSMC’s 3nm packaging edge risks erosion if it lags in photonic integration; ASML may need to adapt EUV for compound semiconductors. CHIPS Act funding eases capex but doesn’t solve InP’s yield challenges or Japan-dominated supply chains. Intel and Cisco will likely double down on silicon photonics as counterplay, while Taiwan, China fabs remain distant from 6-inch InP epitaxy mastery. Within 18 months, optical I/O capability—not just transistor density—will dictate AI data center leadership.