Nvidia investment in Lumentum and Coherent to boost AI chips
Synopsis
Nvidia is set to invest $2 billion each in Lumentum and Coherent to enhance AI chip performance through photonics technology. The partnerships include purchase commitments and access to advanced optical solutions, supporting faster data centre processors amid intensifying competition in the AI hardware market.
Nvidia plans to invest $2 billion each in Lumentum and Coherent to strengthen its AI chip capabilities using photonics technology. The move includes multibillion-dollar purchase commitments and access to advanced laser and optical networking solutions, as the chipmaker looks to meet rising demand for faster AI processors and expand its data centre dominance.
Key highlights
- Nvidia to invest $2 billion each in Lumentum and Coherent
- Lumentum shares closed nearly 12% higher; Coherent rose about 15.5%
- Investments include purchase commitments and access to optical networking technologies
World’s largest chipmaker Nvidia is likely to invest $2 billion each in photonics manufacturers Lumentum and Coherent, according to Reuters. The move aims to strengthen its data centre chips with technology better suited to meet surging demand for faster AI processors.
Nvidia’s $4 Billion Photonics Push to Supercharge AI Chips
NVIDIA is set to invest $2 billion each in Lumentum and Coherent as part of efforts to enhance its AI chip performance using photonics technology.
Shares of Lumentum rose 5%, and Coherent gained 9% in early trading on Monday after the announcement. By the close, Lumentum had surged nearly 12%, while Coherent finished about 15.5% higher.
During its latest earnings call, Nvidia executives said the company plans to deploy its sizable cash reserves to invest across the AI ecosystem and expand model output.
Monday’s partnerships include multibillion-dollar purchase commitments from Nvidia, along with future production capacity and access rights to advanced laser and optical networking technologies from both companies.
Race for Faster AI
The investments aim to strengthen Nvidia’s data centre chips as demand for faster AI processors increases.
The agreements may also help the company widen its advantage in the rapidly evolving AI hardware market, as major cloud providers increasingly develop custom silicon tailored to their AI requirements.
“We will deploy our sizable cash reserves to invest across the AI ecosystem and expand model output,” Nvidia executives said during the company’s latest earnings call.
Moreover, Lumentum CEO Michael Hurlston said the company plans to build a new fabrication facility to boost capacity.
Industry Pressure Builds as Rivals Scale Up
The chip giant has been actively pursuing new technologies to accelerate chip performance, with photonics gaining traction among chipmakers seeking to address growing inference demands.
Last year, custom chipmaker Marvell Technology announced a $3.25 billion acquisition of semiconductor startup Celestial AI to leverage its photonics expertise.
One of Nvidia’s key customers, Meta, signed a $60 billion agreement last week with rival Advanced Micro Devices, increasing pressure to enhance semiconductor performance.
The investments are expected to support research and development, expand production capacity, and strengthen operations as the companies ramp up US manufacturing efforts. Lumentum plans to build a new fabrication facility to increase capacity.
Quick FAQs
Q1. How much is Nvidia investing in Lumentum and Coherent?
Nvidia is likely to invest $2 billion each in Lumentum and Coherent, according to Reuters.
Q2. Why is Nvidia investing in photonics companies?
The investment aims to strengthen Nvidia’s data centre chips and meet the surging demand for faster AI processors.
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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