Observed Signal · Apr 1, 2026 · Technical Release · Source: Chipstrat · Impact: 2/5 · Sentiment: Positive
Coherent Ramps 6-inch InP for Vertical Photonics Stack
Coherent (formerly II‑VI) is pursuing a vertical-integration strategy across the photonics value chain, designing and manufacturing InP-based EMLs and CW lasers, VCSELs, silicon photonics, detectors and finished transceiver modules in-house while outsourcing DSPs. The company began production on a 6‑inch indium phosphide (InP) production platform (Sherman, TX and Järfälla, Sweden) in August 2025 and is ramping additional 6‑inch lines (including Zürich). Management reports higher yields and throughput on 6‑inch vs legacy 3‑inch lines and says datacenter & communications account for ~72% of revenue (Q2 FY2026). Coherent ships 800G/1.6T OSFP modules, demonstrated multi‑DSP 1.6T transceivers, and started revenue shipments of liquid‑crystal optical circuit switches (OCS) in Q4 FY2025. The company has a $2B equity investment and a multibillion‑dollar supply agreement with Nvidia and has run significant stock appreciation over the past 15 months.
Coherent's 6‑inch InP ramp and broad vertical integration materially affect datacenter optical supply and costs, which can influence AI/datacenter infrastructure availability; however the topic is infrastructure-focused and only indirectly relevant to AdTech/MarTech.
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Key Takeaways & Evidence Grounding
- Coherent designs and manufactures InP-based EMLs and CW lasers, VCSELs, silicon photonics, detectors, and finished transceiver modules in-house while outsourcing DSPs.
- In August 2025 Coherent began production on a 6‑inch indium phosphide (InP) production platform in Sherman, Texas and Järfälla, Sweden and is ramping a Zurich 6" line; management reports higher yields and throughput versus legacy 3" lines.
- Approximately 72% of Coherent's revenue comes from Datacenter & Communications and 28% from Industrial (Q2 FY2026 earnings slides).
- Coherent acquired Finisar (~$3.2B in 2019) and Coherent Inc. (~$6.6B in July 2022); II‑VI rebranded the parent company as Coherent Corp. in September 2022.
- Coherent received a $2B equity investment plus a multibillion‑dollar supply agreement with Nvidia and began revenue shipments of liquid‑crystal optical circuit switches (OCS) in Q4 FY2025.
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VCSELs and the 200G-per-Lane Wall in AI Datacenters
This technical analysis (May 6, 2026) explains why VCSELs (vertical-cavity surface-emitting lasers) have dominated short-reach datacenter optics for decades and why the industry's move from 100G to 200G per lane is creating supply-chain and technical challenges. Coherent said it recently demonstrated three different 1.6T transceiver implementations—silicon photonics (SiPh), EMLs, and VCSELs—signaling platform hedging as hyperscalers push from 800G to 1.6T (with 3.2T on the horizon). The article traces VCSEL history (Honeywell research in 1993; first commercial product 1996), the acquisition chain through Finisar and II‑VI/Coherent, and highlights VCSELs' mature, high-volume supply chain driven by consumer uses (e.g., smartphone dot projectors). The piece frames the 200G-per-lane jump as an inflection that could break VCSEL's short-reach advantage and reshape optical interconnect market dynamics.
Co‑Packaged Optics (CPO) Primer
The article explains co‑packaged optics (CPO), a datacenter trend that integrates the optical engine onto or into the switch package to eliminate long copper traces between switch ASICs and transceivers. By moving modulation to silicon photonics and using external continuous‑wave (CW) lasers, CPO reduces the need for DSPs and high‑power SerDes, cutting power and potentially improving reliability and latency. The piece contrasts CPO with pluggable transceivers and intermediate approaches (near‑package optics), highlights manufacturing and serviceability tradeoffs, and notes industry momentum — Nvidia plans CPO shipments in 2026, Broadcom and Marvell are active in early programs, and value is shifting toward silicon photonics, CW laser supply, and advanced packaging while reducing demand for pluggable DSP modules.
Nvidia Pumps $4 Billion into Photonics for AI Revolution
Nvidia announced a combined $4 billion investment into two U.S. photonics companies—$2 billion in Lumentum and $2 billion in Coherent—aimed at strengthening research pipelines and supply chains for AI infrastructure. The agreements include multi-year strategic arrangements with multi‑billion dollar purchase commitments and future capacity or access rights for advanced laser, silicon photonics and optical networking components. Nvidia said the collaborations will advance silicon photonics to support next‑generation, gigawatt‑scale AI data centers. Shares of Lumentum and Coherent rose sharply on the news, and Nvidia stock also gained. Jensen Huang, Nvidia’s founder and CEO, framed the moves as securing sophisticated silicon photonics for large‑scale AI factory builds.
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