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Coherent shares rise as market recognizes internal indium phosphide substrate production capabilities

Friday, December 26, 2025 at 03:09 AM

Coherent is reportedly seeing increased market attention due to its internal production of indium phosphide (InP) substrates, which are critical components for high-speed optical communications and semiconductor infrastructure.

Context

Coherent and Lumentum are aggressively scaling the production of high-performance Electro-absorption Modulated Lasers (EMLs) to address critical bandwidth bottlenecks in AI data center interconnects. These advanced laser chips serve as the backbone for 800G and next-generation 1.6T optical transceivers, which are required to support the massive data throughput of modern GPU clusters. As major hyperscalers shift toward 200G-per-lane architectures, the transition to EML technology is essential for maintaining signal integrity and power efficiency over the longer distances required by large-scale AI fabrics. This ramp-up is strategically timed to meet a projected surge in infrastructure demand throughout 2025. Lumentum has reported strong traction for its 200G EML offerings following recent capacity expansions, while Coherent is utilizing its vertically integrated manufacturing to secure market share in the high-speed optical sector. With the AI-driven market for optical components expected to sustain a compound annual growth rate exceeding 20%, both companies are positioned to capture high-margin revenue as global data centers upgrade their connectivity to handle generative AI workloads.

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