capexScore 80/100Add to thesis
Coherent expanding 6-inch InP capacity in US/Europe plus Sherman, TX facility backed by $50M CHIPS Act PMT
“We continue to expand our global 6-inch InP manufacturing capacity in the United States and Europe to support increasing customer demand... announced the expansion of our Sherman, Texas, manufacturing facility... and received a $50 million preliminary memorandum of terms under the CHIPS and Science Act to support the Sherman expansion.”
Why it matters
InP is the foundational material for next-gen AI optical interconnects (EMLs, 1.6T transceivers, coherent optics); capacity expansion signals management conviction in sustained AI-driven demand and addresses a potential capacity bottleneck.
Investment implication
Supports COHR's ability to capture AI transceiver/EML demand share versus Lumentum and InP competitors; CHIPS Act funding partially offsets capex burden, easing the strain on the company's $3.2B debt load.