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06 Nov 2025
Photonics giant is now producing devices on 6-inch wafers at its Texas and Sweden fabs to meet unprecedented demand.
Coherent has posted sales of $1.58 billion in its latest financial quarter, up 17 per cent year-on-year and a sign of things to come for the next few quarters.
CEO Jim Anderson told an investor conference call that unprecedented demand for the US-based photonics giant’s optical communications products continued to be driven by investments in AI data center infrastructure - leading to record bookings in the quarter.
That demand has prompted a ramp in production of devices fabricated on indium phosphide (InP) semiconductor wafers, specifically lasers and photodiodes, with Coherent now manufacturing those components on 6-inch diameter wafers at two separate fabs.
“InP laser capacity is constrained across the industry,” Anderson said, before predicting that the firm’s InP device output would double over the next 12 months thanks to the switch to larger wafers at Coherent’s sites in Sherman, Texas, and Järfälla in Sweden.
With that demand helping to buoy product pricing while Coherent continues to optimize its operations, the company was able to post pre-tax earnings of $217 million, up strongly from $19 million on sales of $1.35 billion a year ago.
Munich division sold
Shortly before the latest financial update, Coherent revealed that it had agreed to sell its Munich-based industrial tool business - best known for the “Rofin” brand of industrial lasers - to Bystronic, the Switzerland-headquartered sheet metal processing specialist.
The move is part of Anderson’s ongoing effort to rationalize the sprawling Coherent business, something that has already seen the firm exit more than 20 sites since the CEO took over last year.
Just a couple of months ago Coherent sold its aerospace and defense division to private equity group Advent International, realizing $400 million that was immediately used to pay down some of the debt incurred when II-VI and the legacy Coherent laser company merged to form the current photonics behemoth. The deal is scheduled to close in early 2026, and the proceeds will also be used to pay down Coherent’s debt.
Coherent originally acquired what was then known as the Rofin-Sinar laser company in 2016, for close to $1 billion following a protracted takeover deal as it looked to challenge IPG Photonics in high-power fiber lasers.
The deal should help Bystronic target a broader range of applications beyond its core sheet metal business, notably medical device and semiconductor production.
The 400-strong division is said to deliver annual sales of around $100 million currently, and will subsequently be known as “Bystronic Rofin”.
“Bystronic Rofin’s versatile laser technologies will enable the processing of a wide variety of materials - from metal, glass and ceramics to polymers and organic materials,” announced the Swiss firm, with CEO Domenico Iacovelli adding:
“This acquisition is an excellent technological and cultural fit for us, and I am excited to welcome the employees and customers of Bystronic Rofin.”
Long-term order visibility
Noting that some of its key customers in the AI data center space were now outlining their order requirements through 2028, Anderson said that the upgrade to 6-inch InP wafer production would be critical to meeting demand for externally modulated and continuous-wave lasers that continue to outstrip current supply.
Laser components are critical to optical transceivers used to connect rack servers inside data centers, as well as the high-speed interconnects that are used between those data centers.
Smaller-scale optical connectivity in the form of co-packaged optics (CPO) is also set to become more widely deployed, while optical circuit switches (OCS) are expected to help further reduce data bottlenecks.
Anderson told investors that Coherent had recently begun sampling 400 mW CW lasers for CPO and silicon photonics applications, and that seven different customers were now evaluating the firm’s non-mechanical OCS technology, which is based around liquid crystals.
“Our team has done an outstanding job getting 6-inch InP up and running,” noted the CEO, adding that he had seen this as a key priority ever since his appointment in June 2024.
He added that the Sherman fab moved to production on the 6-inch format during the latest quarter and was ramping well, with device yields already higher than the firm’s 3-inch wafers.
Switching to the larger format enables the production of four times as many same-size devices on a single wafer, with fewer edge effects typically meaning higher-yielding processes - although the initial upgrade can be challenging.
“We’ve doubled down on this ramp at a second facility in Sweden, and that’s what allows us to double capacity a year from now,” the CEO noted, adding that there would likely be further expansions beyond that, given the clear order visibility provided by customers through 2028.
• Looking ahead, Anderson indicated that he was expecting very strong sales growth over the next few quarters, starting with a total of between $1.56 billion and $1.7 billion in the December quarter.
Investors reacted well to that outlook, sending Coherent’s NYSE-listed stock price up around 15 per cent, to trade at close to $155 - equivalent to a market capitalization exceeding $25 billion - shortly after markets opened on November 6.
It means that the stock is now up more than 60 per cent since the start of the year, after recovering strongly from both tariff-related shocks and a 20 per cent slump following the firm’s previous quarterly commentary.
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