As photonic technology becomes more integral to artificial intelligence (AI) computing infrastructure, the demand for optical parts has grown to meet fabrication needs. In response, Nvidia, USA, is investing a total of US$4 billion in two US-based photonics companies, Coherent Corp. and Lumentum, to support infrastructure development.

“Computing has fundamentally changed,” said Jensen Huang, Nvidia founder and CEO. “In the age of AI, software runs on intelligence with tokens generated in real time by AI factories for every interaction and every context.”

The companies will each receive US$2 billion after reaching nonexclusive multi-year strategic agreements with Nvidia, which will include multibillion-dollar purchase commitments and capacity access rights for advanced lasers and optical networking products. The investment will also support research and development and capacity building for the companies. Lumentum says it plans to invest in a new fabrication facility, and Coherent will work to build out its domestic manufacturing footprint as well.

Expanding partnerships

Coherent and Lumentum are already collaborators with Nvidia. Nvidia’s Spectrum-X switches—accelerated ethernet platforms designed specifically to boost the network speed and efficiency of AI data centers—use Lumentum lasers and Coherent’s silicon photonics. Spectrum-X was recently in the news as Nvidia and Meta announced in mid-February a strategic partnership to scale out AI computing workloads using the switches.

According to Lumentum, expanding its partnership with Nvidia leverages Nvidia’s expertise in AI and accelerated computing and networking along with Lumentum’s expertise in optics and advanced marketing. “This multiyear strategic agreement reflects our shared commitment to advancing the optics technologies that will power the next generation of AI infrastructure,” said Lumentum CEO Michael Hurlston. “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.”

Coherent mirrors these sentiments regarding its growing collaboration with Nvidia. “This strategic relationship underscores Coherent’s role as a key enabler of next-generation AI data center infrastructure,” said Coherent CEO Jim Anderson. “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.”

Market growth

After the announcement of these partnerships, the stock price of both Lumentum and Coherent shot up ahead of widespread market downturns on 3 March. This is in addition to gains in valuation that both companies have experienced over the past year, with Lumentum’s increasing by a factor of 10 and Coherent’s quadrupling.

According to the US Security and Exchange Commission, Nvidia paid US$695 per Lumentum share for the deal and US$257 per Coherent share.