US backs photonics expansion for AI data centres under CHIPS Act - Digital Watch Observatory

The U.S. Department of Commerce’s CHIPS Program Office has signed a letter of intent to provide up to $50 million in direct funding to Coherent Corp. for expanding its facility in Sherman, Texas, whic... Read original →

The U.S. $50M subsidy to Coherent for indium phosphide production isn’t just about optical interconnects—it’s a strategic grab for post-Moore foundational materials. This move pressures TSMC (Taiwan, China) to accelerate co-packaged photonics integration at sub-3nm nodes using EUV, while NVIDIA’s Blackwell Ultra hints at in-house optical I/O ambitions beyond external transceivers. Compliance-wise, onshoring raw material cuts export control exposure but lifts manufacturing costs by 15–20%, squeezing smaller photonics players. Within 18 months, expect EU and East Asian counterparts to launch dedicated photonic chip subsidies. If mainland China fails to scale 150mm InP wafer yields, it risks a new dependency layer in AI infrastructure stacks.