Nvidia bets Texas AI project can revive American manufacturing

Nvidia is betting that a factory in Sherman, Texas, can become proof that artificial intelligence does not have to hollow out American manufacturing. The company has tied a $2 billion investment in Coherent Corp. to a broader push to build the industrial backbone of the AI era in the United States, with the North Texas project carrying the weight of a national argument about jobs, supply chains and who benefits from the boom.

The Sherman expansion is built around a simple claim: AI needs more than chips and software. Nvidia and Coherent have said optical interconnects and advanced package integration are foundational to next-generation AI infrastructure because they allow ultrahigh-bandwidth, energy-efficient connections across AI factories. Coherent’s plant makes 6-inch indium phosphide semiconductors used in photonics and optical networking, the less visible hardware that helps chips move data fast enough to act as a single system.

That makes the job question more complicated than a headline about factory hiring. Coherent said the Sherman site was expected to create more than 1,000 jobs, including more than 550 direct advanced manufacturing, engineering and technical roles. Those are real positions, but they also point to the kind of labor the AI buildout is rewarding: workers with specialized skills in semiconductors, equipment, and technical operations rather than the broad, union-heavy manufacturing base that once defined the Texas economy.

The project has drawn in public money at every level. Gov. Greg Abbott announced a $14,076,031 Texas Semiconductor Innovation Fund grant on February 6 to accelerate scaled production of indium phosphide wafers in Sherman, a project he said represented more than $154 million in capital investment. The expansion also builds on about $20 million in prior support from the Texas Semiconductor Innovation Fund and the Sherman Economic Development Corporation. The U.S. Department of Commerce’s CHIPS Program Office signed a letter of intent to provide up to $50 million in direct funding.

Nvidia’s pitch is also political. Jensen Huang has framed AI factories as “the infrastructure of a new industrial revolution,” placing Texas at the center of a fight over whether the AI economy can spread opportunity beyond Silicon Valley. Coherent said the Sherman expansion would double manufacturing production space and quadruple wafer production capacity, a sign that the real test is not whether AI can create jobs, but whether those gains reach workers beyond a narrow circle of highly technical roles.