Coherent Corp. (COHR  ) on Tuesday announced an expansion of a manufacturing facility in Texas for lasers and optical networking products, strengthening a key part of Nvidia Corp.'s (NVDA  ) supply chain for the artificial intelligence stack. Nvidia CEO Jensen Huang and Coherent CEO Jim Anderson were in Sherman to mark the expansion, which will boost U.S. production of lasers, optical transceivers and semiconductor technologies used to move data across AI infrastructure.

Indium Phosphide Production Expands

The Sherman facility includes what Coherent described as the world's first high-volume 6-inch indium phosphide manufacturing line.

According to the company, the larger wafer format is expected to improve manufacturing efficiency and increase output as demand for optical technologies continues to grow.

"AI runs on compute, but it scales on connectivity - and Sherman is where that connective tissue gets built," Anderson said.

Nvidia said the expansion adds domestic production capacity for a technology that has become increasingly important in the buildout of next-generation AI infrastructure.

Federal And Private Investment Back Expansion

Coherent said it received a $50 million CHIPS Act grant to help fund the expansion, adding to roughly $17 million previously awarded.

The funding is intended to support increased domestic production of technologies used in AI networking, communications and advanced computing systems.

Price Action: NVDA closed 2.37% lower on Tuesday to $207.41 and fell further by 1.93% in extended trading. COHR fell 7.50% to $382.81 and 5.31% in after-hours trading.

Benzinga Edge Stock Rankings indicate NVDA has a Momentum score in the 77th percentile and a Growth score in the 98th percentile.

Benzinga Edge Stock Rankings indicate COHR has a Momentum score in the 98th percentile and a Growth score in the 16th percentile.