Texas Semiconductor Innovation Fund grant to Coherent Corp for InP wafer production

Mechanism

TSIF is the Texas state-level complement to the federal CHIPS and Science Act ([[2022-08-09-us-chips-and-science-act]]), created under the 2023 Texas CHIPS Act to attract and retain semiconductor-supply-chain investment in-state. Like the earlier TSIF grant to Tekscend Photomask ([[2026-01-14-us-texas-semiconductor-innovation-fund-tekscend-photomask-grant]]), this award targets a second-tier but structurally important input — Indium Phosphide compound-semiconductor wafers used for photonics rather than silicon logic — rather than a marquee leading-edge fab. The USD 14.08M grant covers roughly 9% of the USD 154M total project cost, consistent with TSIF's role as a gap-filling incentive that leverages much larger private capital commitment. InP is a chokepoint material for optical interconnects that data centers and AI compute clusters depend on for high-bandwidth networking; onshoring the first US 6-inch InP wafer line reduces reliance on offshore compound-semiconductor fabrication for this segment.

Downstream implications

• Extends the non-silicon tier of the US semiconductor reshoring push

(photonics/compound semiconductors) alongside prior TSIF awards for photomasks and other supply-chain nodes.

• Strengthens US-based photonics/InP supply for AI-datacenter interconnect

and 6G/satellite communications demand, an increasingly strategic input as AI compute buildouts scale.

• Continues the pattern of Texas state-level fiscal competition

(TSIF) operating alongside federal CHIPS Act incentives.

Open questions

• Whether the grant disbursement is milestone-conditioned (jobs/capex

clawbacks) — the press release does not specify.

• Timeline for the InP wafer facility reaching full production scale.
• Whether Coherent's other North American semiconductor operations will

be consolidated into this Sherman site, as the announcement suggests.