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03 Mar 2026
Lumentum to build a new device fab to meet anticipated laser demand as the AI chip giant agrees huge purchase commitments.
Nvidia, the chip developer whose products are critical to the AI revolution, has invested $4 billion as part of two new strategic supply deals signed with photonics companies Coherent and Lumentum.
AI computing infrastructure increasingly relies on optical connectivity, and aside from ensuring the supply of laser components for current requirements the aim is to advance technologies like silicon photonics that are seen as essential for next-generation computing architectures.
The non-exclusive agreements with Coherent and Lumentum will see Nvidia invest $2 billion in each company, in exchange for multi-billion-dollar purchase commitments, with Lumentum set to build a new device fabrication facility and Coherent adding to its existing US manufacturing footprint.
Both companies are already partnering Nvidia on its "Spectrum-X" switches, which use Lumentum lasers and Coherent's silicon photonics. And just a couple of weeks ago Nvidia announced a "multi-year, multi-generational" strategic partnership with Meta to scale out AI computing workloads with Spectrum-X.
"Meta has adopted the Nvidia Spectrum-X Ethernet networking platform across its infrastructure footprint to provide AI-scale networking, delivering predictable, low-latency performance while maximizing utilization and improving both operational and power efficiency," Nvidia said at the time.
News of the latest deals sent the stock price of the two photonics firms up sharply ahead of widespread stock market downturns on March 3, extending gains that had seen Lumentum’s valuation increase by a factor of ten over the past year, while Coherent’s has more than quadrupled.
Fundamental change
Nvidia CEO Jensen Huang, who has overseen the company’s ascent to the most valuable in the world, said in a release announcing the Coherent agreement:
“Computing has fundamentally changed. In the age of AI, software runs on intelligence with tokens generated in real time by AI factories for every interaction and every context.
“With Coherent, Nvidia is pioneering next-generation silicon photonics to enable AI infrastructure at unprecedented scale, speed and energy efficiency.”
Coherent’s CEO Jim Anderson added: “This strategic relationship underscores Coherent’s role as a key enabler of next-generation AI data center infrastructure.
“We are proud to expand our 20-year relationship with Nvidia by increasing their access to include multiple product families to help them build the AI data centers of the future.”
Michael Hurlston, his counterpart at Lumentum, noted: “This multi-year strategic agreement reflects our shared commitment to advancing the optics technologies that will power the next generation of AI infrastructure.
“In support of this collaboration, we are also investing in a new fabrication facility to increase capacity and accelerate innovation. We’re excited to work together to expand what’s possible for the AI optical architectures of tomorrow.”
According to US Security & Exchange Commission (SEC) filings associated with the two deals, Nvidia paid $2 billion in cash to acquire nearly 2.9 million Lumentum shares, equivalent to a purchase price of $695.31.
The Coherent purchase, also paid in cash, saw Nvidia acquire nearly 7.8 million shares at a price of $256.80.
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