Coherent Signs Preliminary Memorandum of Terms With The U.S. Department of Commerce to Expand the World’s First 150 mm Indium Phosphide Manufacturing Line

Rhea-AI Summary

Coherent Corp. (NYSE: COHR) has signed a non-binding preliminary memorandum with the U.S. Department of Commerce for a proposed $33 million CHIPS Act funding to expand and modernize its Sherman, Texas facility. The investment will support the expansion of the world's first 150 mm indium phosphide (InP) manufacturing line by adding advanced wafer fabrication equipment.

The project aims to enhance the production of InP optoelectronic devices used in datacom, telecom transceivers, AI infrastructure, consumer electronics, medical, and automotive applications. The expansion is expected to create 70 direct jobs and will be implemented at Coherent's existing 700,000 square-foot facility, strengthening U.S. supply chain resiliency and technological leadership in semiconductor manufacturing.

Positive

• Potential $33 million funding from CHIPS Act to expand manufacturing capabilities
• Creation of approximately 70 new direct jobs
• Expansion of world's first 150mm InP manufacturing line
• Strategic partnership with U.S. Department of Commerce strengthening market position

Negative

• Non-binding nature of the preliminary memorandum creates uncertainty about final funding approval

Insights

Financial Analyst

The proposed $33 million CHIPS Act funding represents a strategic opportunity for Coherent to strengthen its position in the InP semiconductor market. While the amount is relatively modest compared to Coherent's market cap, the expansion of the 150mm InP manufacturing line positions the company advantageously in high-growth markets like AI infrastructure and advanced sensing. The creation of 70 jobs and modernization of the Sherman facility could enhance operational efficiency and production capacity. The timing aligns well with increasing demand for InP devices in datacom, telecom and consumer electronics applications. This government backing not only provides capital support but also validates Coherent's technological capabilities and strategic importance in the U.S. semiconductor supply chain.

Tech Expert

The expansion of the world's first 150mm InP manufacturing line marks a significant technological advancement. InP-based devices are important for high-speed optical communications and AI infrastructure, offering superior performance compared to traditional silicon-based semiconductors. The larger 150mm wafer size (versus standard 100mm) enables more efficient production and better economies of scale. This manufacturing capability gives Coherent a competitive edge in producing advanced optoelectronic devices for emerging applications in AI, automotive and medical sectors. The investment in advanced wafer fabrication equipment suggests a focus on increasing both production capacity and technological sophistication, potentially leading to improved yields and cost efficiency.

Proposed CHIPS Act Funding of up to $33 Million Would Support Expansion and Modernization at Coherent’s Existing Plant in Sherman, Texas, and Create Approximately 70 Jobs

SHERMAN, Texas, Dec. 09, 2024 (GLOBE NEWSWIRE) -- On Friday, December 5, 2024, it was announced that Coherent Corp. (NYSE: COHR), a leader in optoelectronic devices and technology, has signed a non-binding preliminary memorandum of terms (PMT) with the U.S. Department of Commerce under the CHIPS and Science Act for a proposed investment of up to $33 million to support the modernization and expansion of a state-of-the-art manufacturing cleanroom in Coherent’s existing 700,000 square-foot facility in Sherman, Texas. This project will expand the world’s first 150 mm indium phosphide (InP) manufacturing line by adding advanced wafer fabrication equipment to produce InP devices at scale.

“This proposed investment allows Coherent to accelerate our industry leadership in InP technology and manufacturing,” said Dr. Giovanni Barbarossa, Chief Strategy Officer and President, Materials Segment, for Coherent. “We are very excited to partner with the U.S. Department of Commerce, Senator John Cornyn, the state of Texas, and the Sherman Economic Development Corporation as we expand our efforts to deliver world-class optoelectronic products as part of the AI infrastructure build out, as well as for advanced sensing applications.”

“By investing in semiconductor manufacturing, we are helping secure this vulnerable supply chain, boosting our national security and global competitiveness, and creating new jobs for Texans,” said Sen. Cornyn. “The chipmaking capabilities these resources will enable at Coherent in Sherman will help the U.S. reclaim its leadership role in the critically important semiconductor industry, and I look forward to seeing more Texas-led advancements in the years to come.”

InP optoelectronic devices are widely used in applications such as datacom and telecom transceivers including for AI infrastructure applications, advanced sensing for consumer electronics, and medical and automotive applications. The increased production of Coherent’s InP devices, which are increasingly growing in demand, would allow the U.S. to advance supply chain resiliency and technological leadership and create 70 direct jobs.

About CHIPS for America

CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. Visit chips.gov to learn more.

About Coherent

Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems. We deliver innovations that resonate with our customers in diversified applications for the industrial, communications, electronics, and instrumentation markets. Coherent has research and development, manufacturing, sales, service, and distribution facilities worldwide. For more information, please visit us at coherent.com.

Media Contact

Amy Wilson
corporate.communications@coherent.com

FAQ

What is the value of CHIPS Act funding proposed for Coherent (COHR)?

The U.S. Department of Commerce has proposed CHIPS Act funding of up to $33 million for Coherent Corp.

How many jobs will Coherent's (COHR) Sherman, Texas facility expansion create?

The expansion project is expected to create approximately 70 direct jobs.

What technology will Coherent (COHR) expand in its Sherman facility?

Coherent will expand the world's first 150 mm indium phosphide (InP) manufacturing line by adding advanced wafer fabrication equipment.

Where is Coherent's (COHR) InP manufacturing facility located?

The facility is located in Sherman, Texas, with 700,000 square feet of space.