The US is increasing its indium phosphide (InP) production capacity with a mix of private investments and government support to meet the growing demand for advanced technologies and strengthen supply chain resilience amid geopolitical tensions.

Demand Surge and Strategic Investments

InP is essential for emerging technologies such as artificial intelligence (AI) infrastructure, data communications, 6G wireless networks, and quantum technology. As demand for data processing and energy-efficient solutions accelerates, US semiconductor and optoelectronic manufacturers are ramping up production to address a widening supply-demand gap.

Geopolitical developments, such as China’s restrictions on gallium and germanium exports to the US, have further highlighted the importance of bolstering domestic production to safeguard supply chains and reduce dependency on foreign sources.

Several key investments are underway to meet this challenge:

1. Coherent: The company has invested $33 million under the CHIPS Act to expand its Sherman, Texas facility and transition to 6-inch InP wafer fabrication. This upgrade will increase device output per wafer by four times, addressing high-volume demands. Additional plans include new wafer plants in Texas and Järfälla, Sweden.
2. Infinera: Infinera is receiving $93 million in federal funding to establish a new InP photonic IC fabrication facility in San Jose, California, and a test and packaging plant in Bethlehem, Pennsylvania. The California plant will increase production capacity by 10 times, while the Pennsylvania site will support secure communications and advanced technologies.
3. IntelliEPI: With $4.12 million from the Texas Semiconductor Innovation Fund (TSIF), IntelliEPI plans to triple its annual wafer production at its Allen, Texas facility, focusing on InP and gallium arsenide wafers for optoelectronic and electronic devices.
4. Lumentum: Lumentum is investing $74 million to expand its production of InP optical transceivers and lasers. The company aims to support cloud computing and AI workloads, with a fully booked manufacturing site in Thailand through 2025.

Strengthening Supply Chains for National Security

The expanded InP production facilities will serve several strategic purposes:

• Enhance energy efficiency for data center communications.
• Strengthen supply chains crucial for national security, including for the Department of Defense and intelligence services.
• Support the development of critical technologies such as LiDAR, quantum sensing, and 6G wireless networks.

Federal initiatives, combined with state-level programs like the Texas Chips Act, underscore the US government’s commitment to advancing the semiconductor and optoelectronics industries.