What Coherent (COHR)'s NVIDIA AI Datacenter Deal and Indium Phosphide Pivot Mean For Shareholders - simplywall.st

Coherent's recent $2.0 billion investment with NVIDIA focuses on next-generation optical and photonics technologies for AI datacenters, reinforcing its strategic position in the rapidly expanding AI i... Read original →

Coherent’s $2B tie-up with NVIDIA marks a strategic pivot to embed indium phosphide (InP)-based photonics at the heart of AI datacenter interconnects, forcing upstream integration with EUV and 3nm ecosystems. China’s InP export curbs—echoing Japan’s 2019 fluorinated polyimide restrictions on Korea—now compel urgent supply chain diversification, likely inflating compliance costs and trimming gross margins by 3–5%. Competitors like Corning, entrenched in silicon photonics IP, and Vishay, advancing in high-speed photodetectors, will exploit any production delays. Over the next 18 months, Coherent must secure alternative InP epitaxy capacity outside China or risk missing its 2029 earnings target and ceding influence in co-packaged optics (CPO) standardization. This isn’t just about optics—it’s a race to own the post-Moore interconnect bottleneck.